商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap005

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商业银行学答案第八版罗斯Chap005

CHAPTER 5THE FINANCIAL STATEMENTS OF BANKS AND THEIR PRINCIPALCOMPETITORSGoal of This Chapter: The purpose of this chapter is to acquaint the reader with the content, structure and purpose of bank financial statements and to help managers understand how information from bank financial statements can be used as tools to reveal how well their banks are performing.Key Topics in this Chapter•An Overview of the Balance Sheets and Income Statements of Banks and Other Financial Firms•The Balance Sheet or Report of Condition•Asset Items•Liability Items•Recent Expansion of Off-Balance Sheet Items•The Problem of Book-Value Accounting and 〞Window Dressing〞•Components of the Income Statement: Revenues and Expenses•Appendix: Sources of Information on theFinancial-Services IndustryChapter OutlineI. Introduction: The Statements Reviewed in This ChapterII An Overview of Balance Sheets and Income StatementsIII The Balance Sheet (Report of Condition)A. The Principal Types of AccountsB. Assets of the Banking Firm1. Cash and Due from Depository Institutions2. Investment Securities: The Liquid Portion3. Investment Securities: The Income-Generating Portion4. Trading Account Assets5. Federal Funds Sold and Reverse Repurchase Agreements6. Loans and Leases7. Loan Losses8. Specific and General Reserves9. International Loan Reserves10.Unearned Income11.Nonperforming (noncurrent) Loans12.Bank Premises and Fixed Assets13.Other Real Estate Owned (OREO)14.Goodwill and Other Intangible Assets15.All Other AssetsC. Liabilities of the Banking Firm1. Deposits2. Borrowings from Nondeposit Sources3. Equity Capital for the Banking Firma. Preferred Stockb. Common EquityD. Comparative Balance Sheet Ratios for Different Size BanksE. Recent Expansion of Off-Balance-Sheet Items in BankingF. The Problem of Book-Value AccountingG. Auditing: Assuring Reliability of Financial StatementsIV. Components of the Income Statement (Report of Income)A. Financial Flows and Stocks1. Interest Income2. Interest Expenses3. Net Interest Income4. Loan Loss Expense5. Noninterest Income6. Noninterest Expenses7. Net Operating Income and Net IncomeB. Comparative Income Statement Ratios for Different-Size Financial FirmsV. The Financial Statements of Leading Nonbank Financial Firms: A Comparison to Bank StatementsVI. An Overview of Key features of Financial Statements and Their ConsequencesVII. Summary of the ChapterConcept Checks5-1. What are the principal accounts that appear on a bank's balance sheet (Report of Condition)The principal asset items on a bank's Report of Condition are loans, investments in marketable securities, cash, and miscellaneous assets. The principal liability items are deposits and nondeposit borrowings in the money market. Equity capital supplied by the stockholders rounds out the total sources of funds for a bank.5-2. Which accounts are most important and which are least important on the asset side of a bank's balance sheetThe principal bank asset items from most important to least important are::Rank Order Assets1 Cash2 Investment Securities3 Loans4 Miscellaneous Assets5-3. What accounts are most important on the liability side of a balance sheetThe principal bank liability items from most important to least important are:Rank Order Liabilities and Equity Capital1 Deposits2 Nondeposit Borrowings3 Equity Capital4 Miscellaneous Liabilities5-4. What are the essential differences among demand deposits, savings deposits, and time depositsDemand deposits are regular checking accounts against which a customer can write checks or make any number of personalwithdrawals. Regular checking accounts do not bear interest under current U.S. law and regulation.Savings deposits bear interest (normally, they carry the lowest rate paid on bank deposits) but may be withdrawn at will (though a bank usually will reserve the right to require advance notice of a planned withdrawal).Time deposits carry a fixed maturity and the bank may impose a penalty if the customer withdraws funds before the maturity date is reached. The interest rate posted on time deposits is negotiated between the bank and its deposit customer and may be either fixed or floating.A NOW account combines features of a savings account and a checking account, while a money market deposit account encompasses transactional powers similar to a regular checking account (though usually with limitations on the number of checks or drafts that may be written against the account) but also resembles a time deposit with an interest rate fixed for a brief period (such as weekly) but then becomes changeable over longer periods to reflect current market conditions.5-5. What are primary reserves, and secondary reserves and what are they supposed to doPrimary reserves consist of cash, including a bank's vault cash and checkable deposits held with other banks or any other funds such as reserves with the Federal Reserve that are accessible immediately to meet demands for liquidity made against the bank.Secondary reserves consist of assets that pay some interest (though usually pay returns that are much lower than earned on other assets, such as loans) but their principal feature is ready marketability. Most Secondary reserves are marketable securities such as short term government securities and private securities such as commercial paper.Both primary and secondary reserves are held to keep the bank in readiness to meet demands for cash (liquidity) from whatever source those demands may arise.5-6. Suppose that a bank holds cash in its vault of $1.4 million, short-term government securities of $12.4 million, privately issued money market instruments of $5.2 million, deposits at the Federal Reserve banks of $20.1 million, cash items in the process of collection of $0.6 million, and deposits placed with other banks of $16.4 million. How much in primary reserves does this bank hold In secondary reservesThe bank holds primary reserves of:Vault Cash + Deposits at the Fed + Cash Items in Collection +Deposits With Other Banks= $1.4 mill. + $20.1 mill. + $0.6 mill. + $16.4 mill.= $38.5 millionThe bank has secondary reserves of:Short-term Government Securities + Private Money-Market Instruments= $12.4 mill. + $5.2 mill.= $17.6 million5-7. What are off-balance-sheet items and why are they important to some financial firmsOff-balance-sheet items are usually transactions that generate fee income for a bank (such as standby credit guarantees) or help hedge against risk (such as financial futures contracts). They are importantas a supplement to income from loans and to help a bank reduce its exposure to interest-rate and other types of risk.5-8. Why are bank accounting practices under attack right now In what ways could financial institutions improve their accounting methodsThe traditional practice of banks has been to record the value of assets and liabilities at their value on the day the accounts were originally created and not change those values over the life of the account. The SEC and FASB started questioning this practice in the 1980’s because they were concerned that investors in bank securities would be misled about the true value of the bank. Using this historical value accounting method may in fact conceal a bank that insolvent in a current market value sense.The biggest controversy centered on the banks’ investment portfolio which would appear to be easy to value at its current market price. At a minimum, banks could help themselves by marking their investment portfolio to market. This would give investors an indication of the true value of the bank’s investment portfolio. Banks could also consider using the lower of historical or market value for other accounts on the balance sheet.5-9. What accounts make up the Report of Income (income statement of a bank)The Report of Income includes all sources of bank revenue (loan income, investment security income, revenue from deposit service fees, trust fees, and miscellaneous service income) and all bank expenses (including interest on all borrowed funds, salaries, wages, and employee benefits, overhead costs, loan loss expense, taxes, and miscellaneous operating costs.) The difference between operating revenues and expenses (including tax obligations) is referred to as net income.5-10. In rank order, what are the most important revenue and expense items on a Report of IncomeBy dollar volume in most recent years the rank order of the revenue and expense items on a bank's Report of Income is:Rank Order Revenue Items Expense Items1 Loan Income Deposit Interest2 Security Income Interest on Nondeposit Borrowings3 Service Charges on Deposits Salaries, Wages, andand Other Deposit Fees Employee Benefits4 Other Operating Revenues Miscellaneous Expenses5-11. What is the relationship between the provision for loan losses on a bank's Report of Income and the allowance for loan losses on its Report of ConditionGross loans equal the total of all loans currently outstanding that are recorded on the bank's books. Net loans are equal to gross loans less any interest income on loans already collected by the bank but not yet earned and also less the allowance for loan-loss account (orbad-debt reserve).The allowance for loan losses is built up gradually over time by an annual noncash expense item that is charged against the bank's current income, known as the Provision for Loan Losses. The dollar amount of the annual loan-loss provision plus the amount of recovered funds from any loans previously declared worthless (charged off) less any loans charged off as worthless in the current period is added to the allowance-for-loan-losses account.If current charge-offs of worthless loans exceed the annual loan-loss provision plus any recoveries on previously charged-off loans the annual net figure becomes negative and is subtracted from the allowance-for-loan-losses account.5-12. Suppose a bank has an allowance for loan losses of $1.25 million at the beginning of the year, charges current income for a $250,000 provision for loan losses, charges off worthless loans of $150,000, and recovers $50,000 on loans previously charged off. What will be the balance in the allowance for loan losses at year-endThe balance in the allowance for loan loss (ALL) account at year end will be:Beginning ALL = $1.25 millionPlus: Annual ProvisionRecoveries onCharged OffMinus: ChargeOffs of Worthless =LoansEnding ALL = $1.40 million5-13. Who are banking’s chief com petitors in the financial servicesThe closest competitors of banks in recent years (at least in terms of the similarity of their financial statements) are the thrift institutions. These include credit unions and savings associations. If we move a little further away from banks both in terms of what they do and the way their financial statements look, banks also compete with finance companies, life and property casualty insurance companies and security brokers and dealers.5-14. How do the financial statements of major nonbank financial firms resemble or differ from bank financial statements Why do these differences or similarities existBanks have very similar financial statements to credit union and savings associations. The only difference may be in the structure of their loan portfolio. Credit unions probably have more loans to individuals and savings associations may have more real estate loans as well as loans to individuals.More differences exist between banks and other major competitors. These diff erences exist because of each company’s unique function. Finance companies have loans but on their balance sheet they are called accounts receivables. In addition, they show heavy reliance on money market borrowings instead of deposits. Insurance companies are different in that loans they make to businesses show up on the balance sheet as bonds, stocks, mortgages and other securities. On the liability side, insurance companies receive the majority of their funds from insurance premiums paid by customers for insurance protection.Mutual funds hold primarily corporate stocks, bonds, asset-backed securities and money market instruments and their liabilities consist primarily of units of the mutual fund sold to the public. Security brokers and dealers tend to hold a similar range of securities funded by borrowings in the money and capital markets.5-15. What major trends are changing the content of the financial statements prepared by financial firmsThe content of the financial statements of financial firms is changing for several reasons. One trend that has affected the financial statements of financial firms is the call for those statements to reflect the true market value of the assets held by the financial firm. More accounts are being listed at the lower of historical or market value so that investors can get a better understanding of the true value of the firm.Another trend that is affecting financial firms is the increased use of off-balance sheet items. The notional amount of these items issometimes surpassing the value of the items on the balance sheet, especially for larger financial institutions. This has led regulators to change their reporting requirements for financial firms and there are likely to be additional requirements in the future.Another trend that is affecting financial firms is the convergence of the various types of financial firms. In addition, financial firms are becoming larger and more complex and more financial holding companies are formed. These are also leading to changes in the content and structure of the financial statements of financial firms. 5-16. What are the key features or characteristics of the financial statements of banks and similar financial firms What are the consequences of these statement features for managers of financial-service providers and for the publicThe financial statements of financial-service firms exhibit three main characteristics that have important consequences for managers of these firms and the public.The first characteristic of these firms is that they have lower operating leverage. They have small amounts of buildings, equipment and other fixed assets. Operating leverage adds risk to the firm and firms with large amount of operating leverage can face large fluctuations in net income and earnings per share for small changes in revenues.Financial-service firms do not have this problem. However, financial service firms have large amounts of financial leverage. Financial leverage comes from how the firm finances their assets. If a firm borrows a lot, they face have larger financial leverage and have a larger amount of risk as a result. Financial service firms finance approximately 90% of their assets with debt and therefore face significant financial leverage.Small changes in revenues can lead to large changes in net income and earnings per share as a result. In addition, changes in interest rates can have significant effects on the net income and capital position of financial firms. Finally, most of the liabilities of financial firms are short term. This means that financial firms can face significant liquidity problems. A sudden demand by depositors for funds can lead to large problems for financial firms.Problems5-1. Jasper National Bank has just submitted its Report of Condition to the FDIC. Please fill in the missing items from itsstatement shown below (all figures in millions of dollars): Report of ConditionTotal assets $2,50Cash and due from Depository Institutions 87 Securities233 Federal Funds Sold andReverse Repurch.45Gross Loans and Leases 1,90* Gross Loans and Leases = Net Loansand Leases+Loan Loss Allowance200Loan Loss Allowance Net Loans and Leases1700Trading Account Assets20Bank Premises and FixedAssets25*This is the only asset missing and so is total assetsless all of the rest of the assets listed hereOther Real Estate Owned15 Goodwill and Other Intangibles200 All Other Assets175Total Liabilities and Capital 2,50*Total Liabilities and Capital = TotalassetsTotal Liabilities 2,26* Total Liabilities = Total Liabilitiesand Capital-Total Equity CapitalTotal Deposits 1,60*Total Deposits = Total Liabilities LessAll of theOther LiabilitiesFederal Funds Purchased and Repurchase Agreements.80 Trading Liabilities10 Other Borrowed Funds50 Subordinated Debt480 All Other Liabilities40Total Equity Capital240Total Equity Capital = Perpetual Preferred Stock +Common Stock+Surplus+Undivided ProfitPerpetual Preferred Stock2 Common Stock24 Surplus144 Undivided Profit705-2. Along with the Report of Condition submitted above, Jasper has also prepared a Report of Income for the FDIC. Please fill in the missing items from its statement shown below (all figures in millions of dollars):Report of IncomeTotal Interest Income$120Total Interest Expense80* Total Interest Expense = Total Interest Income - Net Interest IncomeNet Interest Income40Provision for Loan and Lease Losses4* Provision for Loan and Lease Losses = Net Interest Income + Total Noninterest Income - Total Noninterest Expense - Pretax Net Operating IncomeTotal Noninterest Income58 Fiduciary Activities8 Service Charges on Deposit Accounts6Trading Account Gains and Fees14* There are four areas of Total NoninterestIncome and only one is missing and the totalis givenAdditional Noninterest Income30 Total Noninterest Expense77Salaries and Benefits47*There are three areas of Total NoninterestExpense and only one is missing and the totalis givenPremises and Equipment Expense10 Additional Noninterest Expense20 Pretax Net Operating Income17 Securities Gains (Losses)1 Applicable Income Taxes5Income Before Extraordinary Income13*Pretax Income Plus Security Gains LessTaxes is income before extraordinary incomeExtraordinary Gains – Net2Net Income15* Net Income = Income Before Extraordinary Income + Extraordinary Gains – Net5-3. If you know the following figures:Total Interest Income$140Provision for Loan Loss$5 Total Interest Expenses100Income Taxes5Total Noninterest Income15Increases in bank’s undivided profits6Total Noninterest Expenses35 Please calculate these items:Net Interest Income40*Total Interest Income Less Total Interest ExpenseNet Noninterest Income -2*Total Noninterest Income Less Total Noninterest ExpensePretax net operating income15*Net Interest Income Plus Net Noninterest Income Less PLLNet Income After Taxes10*Pretax net operating income less PLL less TaxesTotal Operating Revenues 155*Interest Income Plus Noninterest IncomeTotal Operating Expenses 14*Interest Expenses Plus Noninterest Expenses Plus PLLDividends paid to Common Stockholders4Net Income After Taxes Less Increases in bank’s undivided profits5-4. If you know the following figures:Gross Loans$275Trading Account Securities Allowance for Loan Losses5Other Real Estate Owned Investment Securities36Goodwill and other Intangibles Common Stock5Total LiabilitiesSurplus19Preferred StockTotal Equity Capital39Nondeposit BorrowingsCash and Due from Banks9Bank Premises and Equipment, Ne Miscellaneous Assets38Bank Premises and Equipment, Gross34Please calculate these items:Total Assets414*Total Liabilities Plus Total Equity CapitalNet Loans270*Gross Loans Less ALLUndivided Profit12*Total Equity Capital less PS less CS Less Surpl Fed funds sold23*This is the only asset missing so subtract all otassets from total assetsDepreciation5* Bank Premises and Equipment, Gross less Ban Total Deposits355*Total Liabilities less Nondeposit Borrowings5-5. The Mountain High Bank has Gross Loans of $750 million with an ALL account of $45 million. Two years ago the bank made a loan for $10 million to finance the Mountain View Hotel. Two million in principal was repaid before the borrowers defaulted on the loan. The Loan Committee at Mountain High Bank believes the hotel will sell at auction for $7 million and they want to charge off the remainder immediately.a. The dollar figure for Net Loans before the charge-off isNet Loans = Gross Loans –ALL = $750 - $45 = $705b. After the charge-off, what are the dollar figures for GrossLoans, ALL and Net Loans assuming no other transactions.Gross Loans = $750 - $1 = $749 The gross loans nowreflect the realizable value.ALL = $45 - $1 = $44 *The amount of the loan that is badNet Loans = $749 -$44 = $705c. If the Mountain View Hotel sells at auction for $8 million, thebank recovers full principal on the loan.Gross Loans = $750 - $8 = $742ALL = $45 ALL is restored to original amountNet Loans = $742 -$45 = $6975-6. For each of the following transactions, which items on a bank’s statement of income and expenses (Report of Income) would be affecteda. Office supplies are purchased so the bank will have enoughdeposit slips and other necessary forms for customer andemployee use next week.This would be part of Additional noninterest expense and part of Total Noninterest Expense.b. The bank sets aside funds to be contributed through itsmonthly payroll to the employee pension plan in the name of all its eligible employees.This would be part of Salaries and Benefits and part of Total Noninterest Expenses.c. The bank posts the amount of interest earned on the savings account of one of its customers.This would be part of Total Interest Expenses.d. Management expects that among a series of real estate loans recently granted the default rate will probably be close to 3 percent.This would be part of PLL to go into reserves for future bad debts.e. Mr. And Mrs. Harold Jones just purchased a safety deposit box to hold their stock certificates and wills.This would be part of Additional Noninterest Income and part of Total Noninterest Incomef. The bank colleges $1 million in interest payments from loans it made earlier this year to Intel Composition Corp.This would be part of Total Interest Incomeg. Hal Jones’s checking account is charged $30 for two of Hal’s checks that were returned for insufficient funds.This would be part of Service Charges on Deposit Accounts and then part of Total Noninterest Incomeh. The bank earns $5 million in interest on government securities it has held since the middle of last year.This would be part of Total Interest Income.i. The bank has to pay its $5,000 monthly utility bill today to the local electric company.This would be part of Premises and Equipment Expenses and part of Total Noninterest Expensesj. A sale of government securities has just netted the bank a $290,000 capital gain (net of taxes).This would be part of Security Gains (Losses)5-7. For each of the transactions described here, which of at least two accounts on a bank’s balance sheet (Report of Condition) would be affected by each transactiona. Sally Mayfield has just opened a time deposit in the amountof $6,000 and these funds are immediately loaned to RobertJones to purchase a used car.Gross Loans +$6,000Total Deposits +$6,000b. Arthur Blode deposits his payroll check for $1000 in the bank and the bank invests the funds in a government security.Securities + $1,000Total Deposits +$1,000c. The bank sells a new issue of common stock for $100,000 to investors living in its community, and the proceeds of that sale are spent on the installation of new ATMs,Bank Premises & Equipment, Gross +$100,000Common Stock /Surplus +$100,000d. Jane Gavel withdraws her checking account balance of $2,500 from the bank and moves her deposit to a credit union; the bank employs the funds received from Mr. Alan James, who just paid off his home equity loan, to provide Ms. Gavel with the funds she withdrew.Gross Loans -$2,500Total Deposits -$2,500e. The bank purchases a bulldozer from Ace Manufacturing Company for $750,000 and leases it to Cespan Construction Company.Cash and Due from Bank-$750,000Gross Loans and Leases+750,000f. Signet National Bank makes a loan of reserves in the amount of $5 million to Quesan State Bank and the funds are returned the next day.On the day the funds are loaned the accounts are affected in the following manner:Cash and Due from Bank-$5,000,000Federal Funds Sold+$5,000,000and when the finds are returned the next day, the process is reversed.g. The bank declares its outstanding loan of $1 million from theDeprina Corp. to be uncollectible.Gross Loans -$1,000,000ALL -$1,000,0005-8. The Nitty Gritty Bank is developing a list of off-balance-sheet items for its call report. Please fill in the missing items from its statement shown below. Using Table 5-5, describe how Nitty Gritty compares with other banks in the same size category regarding its off-balance sheet activities.Off-balance-sheet items for Nitty Gritty Bank (in millions of $)Total unused commitments$7,000Standby letters of credit andforeign office guarantees$1,350(Amount conveyed to others)($50)Commercial Letters of Credit$48Securities Lent$2,200Derivatives (total)$97,000Notional Amount of CreditDerivatives$22,000Interest Rate Contracts54000Foreign Exchange Rate Contracts 19,800Total Derivatives LessAll Other DerivativesContracts on other commoditiesand equities$1,200 All other off - balance -sheetliabilities$49Total off-balance-sheet Items$107,597 The sum of all of the off-balance sheet itemTotal Assets (on-balance sheet)$10,500Off-balance-sheet assets ÷1025%on-balance-sheet assetsThis looks very similar to other banks of the same size.5-9. See if you can determine the amount of Cardinal State Bank’s current net income after taxes from the figures below (stated in millions of dollars) and the amount of its retained earnings from current income that it will be able to reinvest in the bank. (Be sure to arrange all the figures given in correct sequence to derive the bank’s Report of Income.)Total Interest IncomeInterest on Loans$86Int earned on Govt. Bonds andNotes$9Total$95Total Interest ExpenseInterest Paid on Fed FundsPurchased$5Interest Paid to Customers Timeand Savings Deposits$34Total$39Net Interest Income$56Provision for Loan Loss$2Total Noninterest IncomeService Charges Paid byDepositors$3Trust Department Fees$3Total$6Total Noninterest ExpensesEmployee Wages, Salaries andBenefits$13Overhead Expenses$3Total$16 Net Noninterest Income($10) Pretax Income$44 Taxes Paid (28%)$12 Securities Gains/(Losses)$(7) Net Income$25 Less Dividends$4 Retained Earnings from CurrentIncome$215-10. Which of these account items or entries would normally occur on a ba nk’s balance sheet (Report of Condition) and which on a bank’s income and expense statement (Report of Income)The items which would normally appear on a bank's balance sheet are:Federal funds sold Deposits due to BankCredit card loans Leases of BusinessEquipment ToCustomersVault cash Savings DepositAllowance for loanlossesUndivided profitsCommercial and Industrial Loans Mortgage Owed on the Bank’s BuildingsRepayment of Credit Card Loan Other Real Estate OwnedCommon Stock Additions toUndivided profitsFederal fundspurchasedThe items which would normally appear on a bank’s income statement are:Interest Receivedon Credit CardLoansDepreciation on Plantand EquipmentInterest Paid on Money Market Deposits Provision for Loan LossesSecurity Gains or Losses Service Charges on。

商业银行管理组织彼得S.罗斯英文原书第8版英语试题目整合Chap015.docx

Chapter 15The Management of CapitalFill in the Blank Questions1.The risk that has to do with banks trading in foreign currencies is called_________________________.Answer: exchange risk2.The risk that has to do with fraud, embezzlement and bank robberies is called__________________.Answer: crime risk3._________________________ is measured by the par value of the shares of commonequity outstanding.Answer: Common stock4.__________________ is the amount in excess of par value paid by the bank'sshareholders.Answer: Surplus5._________________________ are the net earnings of the bank which have been keptby the bank rather than distributed as dividends to stockholders.Answer: Undivided Profits (or retained earnings)6. Core capital such as common stock, surplus, undivided profits, qualifyingnoncumulative preferred stock, etc. is referred to as __________________ capital as defined by the Basel agreement.Answer: Tier 17.The international treaty involving the U.S. and 11 other leading industrializedcountries to impose common capital requirements on all banks is known as the_________________________.Answer: Basel Agreement8.Supplemental capital such as the allowance for loan losses, subordinated debt,mandatory convertible debt, intermediate-term preferred stock, cumulativepreferred perpetual stock and equity notes is more commonly known as_________________________.Answer: Tier 2 capital9.When items on a bank's balance sheet are multiplied by the appropriaterisk-weighting factor they are often called _________________________.Answer: risk-weighted assets10.The fact that a bank may suffer deficiencies in quality control, inefficiencies inproducing and delivering of services, weather damage, aging or faulty computersystems, errors in judgment by management and fluctuations in economy thatcould adversely affect the bank's performance is known as _________________________ risk.Answer: operational11.One defense against risk for the bank is to spread out a bank's credit accountsand deposits among a wide variety of customers, including large and smallaccounts different industries, etc. This defense is known as_________________________. Answer: portfolio diversification12.One defense against risk is for the bank to seek out customers located indifferent communities or in different countries. This defense is known as_________________________.Answer: geographic diversification13.When all else fails, the ultimate defense against risk in banking is_________________________.Answer: owners' capital (net worth)14.The largest component of capital among thrift institutions is _____________.Answer: retained earnings.15.The largest component of capital among banks is ____________.Answer: surplus16.____________ models attempt to measure price or market risk of a portfolio of assetsand attempt to determine the maximum loss they might sustain over a designatedperiod of time.Answer: Value at risk (VaR)17.The latest revision to the Basel accord is known as __________ and will affect onlyabout 20 of the largest U.S. banks and a handful of leading foreign banks. Answer:Basel II18.____________ models measure lender exposure to defaults or credit downgrades.Answer: Credit Risk19.Credit risk models will be ________ widely used when Basel II takes effect.Answer: more20. At the center of the debate of the Basel Agreement is the,headquartered in Basel Switzerland , which assists central banks in theirtransactions with each other and serves as a forum for international financialissues.Answer: Bank for International Settlements (BIS)21.represents funds set aside for contingencies such as legal.action against the institution as well as providing a reserve for dividendsexpected to be paid but not yet declared and a sinking fund to retire stock or debtin the future.Answer: Equity reserves22.are debt securities repayable from the saleof stock.Answer: Equity commitment notes23. is a hybrid form of equity capital issued to investors through a trust company, Thefunds raise are loaned to the financial firm.Dividends paid to stockholders on this time of capital are tax deductible.Answer: Trust preferred stock24.is long-term debt capital whose claims legallyfollow claims of depositors.Answer: Subordinated notes and debentures25.for banks include mortgage servicingrights and purchased credit card relationships and can be counted as part ofbank capital.Answer: Identifiable intangible assetsTrue/False QuestionsT F 26. In the field of banking, capital refers principally to those funds contributedby a bank's owners.Answer: True.T F 27. According to the textbook capital and risk are intimately related to eachother.Answer: TrueT F 28. One fundamental purpose for regulating capital is to limit losses to thefederal government arising from deposit insurance claims.Answer: TrueT F 29. Deposit insurance subsidized by government encourages banks to increasetheir ratios of capital to deposits.Answer: FalseT F 30. Tier 2 includes undivided profits.Answer: FalseT F 31. Core capital includes the surplus account for stock.Answer: TrueT F 32. Under the international capital (Basel) agreement Tier 2 capital must beraised to a minimum of 4 percent of risk-weighted assets.Answer: FalseT F 33. Off-balance-sheet commitments of banks carry capital requirements under.the international (Basel) capital requirements.Answer: TrueT F 34. Portfolio diversification refers to seeking out customers located in differentcommunities or countries, which presumably will experience different economicconditions.Answer: FalseT F 35. Geographic diversification refers to the spreading out credit accounts anddeposits among a wide variety of customers, including large and smallbusiness accounts, different industries, and households with a variety ofsources of income and collateral.Answer: FalseT F 36. The last line of defense against bank failure is owner's capital, according tothe textbook.Answer: TrueT F 37. Under the FDIC Improvement Act of 1991 a U.S. bank possessing a leverageratio greater than 4 percent would be considered well capitalized.Answer: FalseT F 38. Under the FDIC Improvement Act of 1991 a bank whose leverage ratiodrops to 2 percent or less is considered to be critically undercapitalized.Answer: True.T F 39. Recent research suggests that interest-rate contracts display considerablyless risk exposure than do foreign-currency contracts.Answer: TrueT F 40. The Basel Agreement on capital as drafted in the 1980s failed to deal withmarket risk.Answer: TrueT F 41. If a bank benefits when the value of a foreign currency rises, the bank is said to be in a short position.Answer: FalseT F 42. If a bank benefits when a foreign currency declines in value, then the bank is ina long position.Answer: FalseT F 43. If the ratio of tangible equity capital to total assets is 2 percent or less it issubject to being placed in conservatorship or receivership if its capital ratios are notincreased within a prescribed period of time even if its net worth is still positive.Answer: TrueT F 44. According to recent research, bank stock prices usually drop within a weekafter a dividend cut is announced.Answer: True.T F 45. Equity notes are considered to be part of Tier 1 capital.Answer: FalseT F 46. The most important source of thrift capital in terms of dollar volume iscommon stock (par value).Answer: FalseT F 47. The daily rate at which robberies have occurred in the U.S. has continued toclimb in the 1990s.Answer: FalseT F 48. One of the reasons to regulate the capital position of banks is to limit therisk of bank failures, especially large bank failures.Answer: TrueT F 49. Deposits with the Federal Reserve banks are considered to have moderatecredit risk and are therefore placed in the 50 percent risk weight category.Answer: FalseT F 50. The largest component of capital among banks is retained earnings.Answer: FalseT F 51. VaR models provide a single number which indicates the potential forlosses on a portfolio of assets.Answer: True.T F 52. VaR models are most successful in assessing potential risk when the assetsare non-traded.Answer: FalseT F 53. Credit risk models will probably not be needed when Basel II takes effect.Answer: FalseT F 54. One of the key innovations which have been proposed in Basel II is torequire banks to hold capital against operational risk.Answer: TrueT F 55. Basel II will require each bank to determine its own capital requirementsbased on its own calculated risk exposure.Answer: TrueT F 56. It is anticipated that Basel II may lower capital requirements for the largestbanks.Answer: TrueT F 57.The global financial crisis of 2007-2009 highlighted the importance oftaking into consideration a bank’ s exposure to market risk that arise fromchanges in interest rates, security prices, and currency.Answer: TrueT F 58. Smaller banks rely more heavily on internally generated capital than largerbanks.T F 59. A well-capitalized institution has a ratio of capital to risk-weighted assets of at least 10 percent and faces no significant regulatory restrictions on itsexpansion.Answer: TrueT F 60. Regulatory capital focus on the market value of equity.Answer: FalseMultiple Choice Questions61.According to the textbook the role of capital is to:A)Provide a cushion against failure risk.B)Provide funds needed to organize, open, and operate a bank.C)Promote public confidenceD)Support growth and the development of new servicesE)All of the above.Answer: E62.The textbook discusses several alternative defenses banks have against risk. Thesedefenses include:A)Quality managementB)Portfolio diversificationC)Geographic diversificationD)Deposit insuranceE)All of the above.63.Measured by dollar volume the largest category of capital at U.S. banks is:A)Par value of common stockB)Subordinated notes and debenturesC)SurplusD)Undivided profits and capital reservesE)None of the above.Answer: C64.The fundamental purposes of regulating bank capital cited in the textbook includewhich of the following?A)To limit the risk of bank failures.B)To preserve public confidence in banks.C)To limit losses to the federal government arising from insurance claims.D)All of the above.E) A and B only.Answer: D65.The Internal Capital Growth Rate for a bank is a function of which of the followingfactors?A)Profit margin.B)Asset utilization.C)Equity multiplier.D)Earnings retention ratio.E)All of the above.Answer: E66.Second National Bank is forecasting a return on equity of 15 percent for this year..The board of directors wants to maintain its current policy of paying the bank'sstockholders 40 percent of any net earnings the bank will earn. How fast can thebank's assets grow this year without jeopardizing its ratio of capital to assets?A)15 percent.B)9 percent.C)8 percent.D) 6 percent.E)None of the aboveAnswer: B67.Possible breakdowns in quality control, inefficiencies in producing anddelivering financial services, weather damage, aging or faulty computersystems and simple errors in judgment by bank management illustrate whatform of risk faced by banks?A)Credit riskB)Liquidity riskC)Interest-rate riskD)Operational riskE)None of the aboveAnswer: D68.The ratio of core capital to average assets is called the:A)Supplemental Capital ratioB)Leverage ratioC)Long-term capital ratioD)GAAP capital ratioE)None of the above.Answer: B69.The risk that a customer the bank has entered into a contract with will fail to payor to perform, forcing the bank to find a replacement contract that may be lesssatisfactory is what form of risk listed below?A)Counterparty riskB)Interest-rate riskC)Operating riskD)Credit riskE)Liquidityrisk Answer: A70.If a bank benefits when a foreign currency declines in value, then the bank mustbe in a __________ position. The term below that correctly fills in the blank in the preceding sentence is:A)LongB)ShortC)NegativeD)Credit riskE)None of the aboveAnswer: B71.In the United States a 'well capitalized' bank must have a ratio of capital torisk-weighted assets of at least:A) 6 percentB)8 percentC)10 percent.D) 5 percent.E)None of the aboveAnswer: C72.In the United States a bank to be considered 'adequately capitalized' must havea ratio of Tier 1 (or core) capital to risk-weighted assets of at least:A)8 percentB) 6 percentC)10 percentD) 4 percentE)None of the aboveAnswer: D73. A "well capitalized" bank in the United States must have a leverage ratio of at least:A) 5 percentB) 4 percentC) 6 percentD)8 percentE)None of the aboveAnswer: B74. A bank has $100 million in assets in the 0 percent risk weight category, $200million in assets in the 20 percent risk weight category, $500 million in assets in the50 percent risk weight category and $750 million in assets in the 100 percent riskweight category. This bank has $57 million in core (Tier 1) capital. What is thisbank's ratio of Tier 1 capital to risk-weighted assets?A) 3.68 percentB)7.6 percentC)18.25 percentD) 5.48 percentE)None of the aboveAnswer: D75. A bank has a profit margin of 5 percent, an asset utilization ratio of 11 percent , anequity multiplier of 12 and a retention ratio of 60 percent. What is this bank'sICGR?A) 6.6 percentB) 3.96 percentC)7.2 percentD).33 percentE)None of the aboveAnswer: B76.Which of the following would be an example of Tier 1 capital?A)Subordinated debt capital instruments with an original maturity of at least5 yearsB)Allowance for loan and lease lossesC)Minority interest in the equity accounts of consolidated subsidiariesD)Intermediate term preferred stockE)All of the aboveAnswer: C77.Which of the following would be an example of Tier 2 capital?A)Subordinated debt capital instruments with an original maturity of at least5 yearsB)Undivided profitsC)Minority interest in the equity accounts of consolidated subsidiariesD)Qualifying noncumulative preferred stockE)All of the aboveAnswer: A78.Which of the following would be an example of crime risk?A) A bank manager that embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest and principal has beencollected in 2 yearsD) A bank manager predicts that interest rates will rise. However interest rates fallcausing the bank 's net income to fall by $250,000E)All of the above are examples of crime riskAnswer: A.79.Which of the following assets fits into the 0 percent risk weight category?A)CashB)Deposits at the Federal ReserveC)Treasury BillsD)GNMA mortgage-backed securitiesE)All of the above fit into the 0 percent risk weight categoryAnswer: E80. A bank that is 'well-capitalized':A)Faces no significant regulatory restrictionsB)Cannot accept broker placed deposits without regulatory approvalC)Has limits on dividends and management fees it is allowed to pay and limits onthe maximum asset growth rate among other restrictionsD)Will be placed into conservatorship or receivership if it its capital level is notincreased within a certain time limit.E)None of the aboveAnswer: A81. A bank that is 'critically undercapitalized':A)Faces no significant regulatory restrictionsB)Cannot accept broker-placed deposits without regulatory approvalC)Has limits on dividends and management fees it is allowed to pay and limits onthe maximum asset growth rate among other restrictionsD)Will be placed into conservatorship or receivership if it its capital level is notincreased within a certain time limit.E)None of the aboveAnswer: D82. A bank that is adequately capitalized:A)Faces no significant regulatory restrictions.B)Cannot accept broker-placed deposits without regulatory approvalC)Has limits on dividends and management fees it is allowed to pay and limits onthe maximum asset growth rate among other restrictionsD)Will be placed into conservatorship or receivership if it its capital level is notincreased within a certain time limit.E)None of the aboveAnswer: B83.Which of the following is in the 100 percent risk-weight category?A)CashB)General obligation municipal bondsC)Residential mortgage loansD)Credit card loansE)None of the aboveAnswer: D84.Which of the following is in the 50 percent risk-weight (moderate) category?A)CashB)General Obligation Municipal BondsC)Residential Mortgage LoansD)Credit Card LoansE)None of the aboveAnswer: C85.Which of the following is in the 20 percent risk-weight (low) category?A)CashB)General obligation municipal bondsC)Residential mortgage loansD)Credit card loansE)None of the aboveAnswer: B.86. A bank has a ROE of 14 percent and a ROA of 2 percent. What is this bank's equitycapital to total assets ratio?A)7.00 percentB)14.29 percentC)28.00 percentD)16 percentE)None of the aboveAnswer: B87. A bank has $200 million in assets in the 0 percent risk-weight category. It has $400million in assets in the 20 percent risk-weight category. It has $1000 million inassets in the 50 percent risk-weight category and has $1000 million in assets in the100 percent risk-weight category. This bank has $96 million in Tier 1 capital and$48 million in Tier 2 capital. What is this bank's ratio of Tier 1 capital to risk assets?A) 6.08 percentB) 3.04 percentC)9.11 percentD) 5.54 percentE)None of the aboveAnswer: A88. A bank has $200 million in assets in the 0 percent risk-weight category. It has $400million in assets in the 20 percent risk-weight category. It has $1000 million inassets in the 50 percent risk-weight category and has $1000 million in assets in the100 percent risk-weight category. This bank has $96 million in Tier 1 capital and$48 million in Tier 2 capital. What is this bank's ratio of Tier 2 capital to risk assets?A) 6.08 percentB) 3.04 percentC)9.11 percentD) 5.54 percent.E)None of the aboveAnswer: B89. A bank has $200 million in assets in the 0 percent risk-weight category. It has $400million in assets in the 20 percent risk-weight category. It has $1000 million inassets in the 50 percent risk-weight category and has $1000 million in assets in the100 percent risk-weight category. This bank has $96 million in Tier 1 capital and$48 million in Tier 2 capital. What is this bank's ratio of total capital to risk assets?A) 6.08 percentB) 3.04 percentC)9.11 percentD) 5.54 percentE)None of the aboveAnswer: C90. A bank has a net profit margin of 5.25 percent. It has an asset utilization ratio of 45percent and has an equity multiplier of 12. It retains 40 percent of its earnings eachyear. What is this bank's internal capital growth rate?A)28.35 percentB) 2.36 percentC)11.34 percentD) 4.8 percentE)None of the aboveAnswer: C91.The revised Basel I rules impose capital requirements for market risk on:A)Only the largest banksB)Only the smallest banksC)Only moderate size banksD)All banksE)No banksAnswer: A92.Bank debt which appears to be highly sensitive to the market perception ofthe bank's risk is which of the following?A)DepositsB)Fed fundsC)ReposD)Subordinated debt capitalE)Preferred stockAnswer: D93.Bank operational risk includes:A)Employee fraudB)Account errorsC)Computer breakdownsD)Natural disastersE)All of the aboveAnswer: E94.The issue of correctly adding up all of the different types of bank risk exposureis known as:A)Risk tallyingB)Summing riskC)Risk aggregationD)Risk accumulationE)Risk totalityAnswer: C95. For a bank with deficient capital ratios, which of the following actions could berequired by regulators to increase the capital ratios, all else constant?A)Cut the bank's dividend paymentB)Increase the bank's leverageC)Reduce the bank ’ s holdings of cashD)Increase the bank's growth rate by making additional commercial loans.E)Reduce the bank's holdings of Treasury securities.Answer: A96.Basel II has a different set of rules for different bank size categories andthe number of categories is:A)twoB)threeC)fourD)fiveE)tenAnswer: A97.Which of the following would be an example of exchange risk?A) A bank manager embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest or principal hasbeen collected in 2 yearsD) A bank manager predicts interest rates will rise. However interest rates fallcausing the bank ’ s net income to fall by $250,000E)All of the above are examples of exchange riskAnswer: B98.Which of the following would be an example of credit risk?A) A bank manager embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest or principal has beencollected in 2 yearsD) A bank manager predicts interest rates will rise. However interest rates fallcausing the bank ’ s net income to fall by $250,000E)All of the above are examples of credit riskAnswer: C99.Which of the following would be an example of interest rate risk?A) A bank manager embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest or principal hasbeen collected in 2 yearsD) A bank manager predicts interest rates will rise. However interest rates fallcausing the bank ’ s net income to fall by $250,000E)All of the above are examples of interest rate risk?Answer: D100.Which of the following would be an example of operational risk?A) A bank teller manages to steal $250,000 over a period of several monthsB)An out of date computer system causes the bank to lose $750,000C) A bank is forced to sell $1,000,000 in loans at a loss in order to meet theneeds of depositorsD)A $500,000 loan the bank has made has been deemed uncollectableE)None of the above are examples of operational riskAnswer: B101.Which of the following would be an example of liquidity risk?A) A bank teller manages to steal $250,000 over a period of several monthsB)An out of date computer system causes the bank to lose $750,000C) A bank is forced to sell $1,000,000 in loans at a loss in order to meet theneeds of depositorsD)A $500,000 loan the bank has made has been deemed uncollectableE)None of the above are examples of liquidityrisk Answer: C102. Which of the following would not be an example of operational risk?A) A bank on the coast of Louisiana is hit by a hurricane and is flooded for 6 weeksB) A bank employee acting as a derivatives trader is also the one who writes thereports on profits and losses in derivatives trading at the end of each dayC)The banks older computer system breaks down causing a loss of serviceto customers for 2 weeksD) A bank robber robs a teller at gun point and gets away before police can get tothe bankE)All of the above are examples of operational riskAnswer: D103.The Jennings Bank of Texas wants to protect itself from credit risk by making large loans to corporate customers, by making residential mortgages to families,by making agriculture loans to farmers and ranchers in the area, by making smallbusiness loans to business along main street and by making automobile loans forthe car dealership across the street from the bank. What defense against risk isthis bank making?A)Portfolio diversificationB)Geographic diversificationC)Quality managementE)All of theabove Answer: A104.The Michelson Bank of Stetson wants to protect itself from risk. It decides to make loans in Florida, Georgia, Texas and Oklahoma as well as invest in municipalbonds from California and Oregon. What defense against risk is this bank making?A)Portfolio diversificationB)Geographic diversificationC)Quality managementD) Increasing owners’ capitalE) All of the above105.The Perdue Bank of Houston has just hired a new manager who has a reputation of anticipating potential problems and acting quickly to prevent those problems so that the bank stays healthy and profitable. What defense against risk is this bank making?A)Portfolio diversificationB)Geographic diversificationC)Quality managementE)All of theabove Answer: C106.The Norton Bank of Illinois has just issued trust preferred stock. What defense against risk is this bank making?A)Portfolio diversificationB)Geographic diversificationC)Quality managementE)All of theabove Answer: D107.What type of preferred stock has become popular among large banks in recent years, partly because dividends paid are tax deductible for the issuing institution?A)Cumulative preferred stockB)Noncumulative preferred stockC)Convertible preferred stockD)Trust preferred stockE)All of the aboveAnswer: D108. Even if individual banks are good at forecasting risk using VAR models there may still be problems because losses may occur at several banks at the same time dueto the interdependency of the financial system, magnifying each bank ’ s risk exposure and possibly causing a major problem for regulators. The book calls this:A)Systematic riskB)Operational riskC)Credit riskD)Market riskE)Liquidity riskAnswer: A109.There are three pillars of Basel II. One of them wants to make market discipline a powerful force compelling risky banks to lower their risk exposure. What doesBasel II want to do to make this happen?A) Require minimum capital requirement based on the bank’s own evaluation ofits riskB) Require greater public disclosure of each bank’ s true financial conditionC)Expand the risks to be evaluated to include credit risk, market riskand operational riskD) Require supervisory review of each bank’ s risk evaluation proceduresE) All of the aboveAnswer: B110. A bank has capital to risk weighted assets of 11.5%, Tier 1 capital to risk weighted assets of 7.2% and a leverage ratio of 5.8%. What type of bank is this?A)Well capitalizedB)Adequately capitalizedC)UndercapitalizedD)Significantly undercapitalizedE)Criticallyundercapitalized Answer: A111. A bank has capital to risk weighted assets of 9.2%, Tier 1 capital to risk weighted assets of 5% and a leverage ratio of 4.8%. What type of bank is this?A)Well capitalizedB)Adequately capitalizedC)UndercapitalizedD)Significantly undercapitalizedE)Critically undercapitalizedAnswer: B112. A bank has capital to risk weighted assets of 9.2%, Tier 1 capital to risk weighted assets of 4.5% and a leverage ratio of 3.7%. What type of bank is this?A)Well capitalizedB)Adequately capitalizedC)UndercapitalizedD)Significantly undercapitalizedE)Critically undercapitalizedAnswer: C113.A bank has capital to risk weighted assets of 5.5%, Tier 1 capital to risk weighted assets of 2.8% and a leverage ratio of 2.6%. What type of bank is this?A)Well capitalizedB)Adequately capitalizedC)UndercapitalizedD)Significantly undercapitalized。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap001

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap001Chapter 1An Overview of the Changing Financial-Services SectorFill in the Blank Questions1. _______________________ is a traditional service provided by banks in which the banks store thevaluables of their customers and certify their true value.Answer: Safekeeping of valuables2. The fact that financial institutions make loans based on confidential information is the_______________________ theory of banking.Answer: delegated monitoring3. _______________________ refers to when a financial institution trades one form of currency foranother. An example of this would be when the bank trades dollars for yen for a fee.Answer: currency exchange4.A(n) _______________________ is a traditional service which permits a depositor to write a draft（汇票）in payment for goods and services.Answer: demand deposit (checking account)5. _______________________ is a service provided by banks where the bank lends money toindividuals for the purchase of durable and other goods.Answer: Consumer lending6. The _______________________ of a bank is a traditional service where the bank manages thefinancial affairs and property of individuals (and in somecases businesses).Answer: trust services7. Companies such as Merrill Lynch and Sears which offered some but not all banking services in the1980s were called _______________________.Answer: nonbank banks8. The loosening of government regulation and control of financial institutions is called_______________________.Answer: deregulation9. ___________________________ is an alternative to lending in which the financial institutionpurchases the equipment and rents it to its customers.Answer: Equipment leasing services10. The___________________________ is a landmark act which allows financial service providers tooffer an expanded menu of financial services for the customer. This law allows banks to truly become conglomerate financial service providers.Answer: Financial Services Modernization Act (Gramm-Leach-Bliley Act)11. The country with the most banks is _______________________.Answer: United States12. According to Congress a ____________ is defined as any institution that can qualify for depositinsurance administered by the FDIC.Answer: Bank13. A bank which spans regions, nations, and continents, offering the widest menu of financial servicesis known as a __________bank.Answer: money-center bank14. _____________ refers to the movement of businesses across industry lines in order to broaden itsbase.Answer: Convergence15. Banks which serve primarily households and small firms are known as ____________ banks.Answer: retail16. Banks that sell deposits and make loans to businesses and individuals are known as ______banks.Answer: commercial17. Banks which underwrite issues of new securities for their corporate customers are known as________ banks.Answer: investment18. Banks which function under a federal charter through the Comptroller (审计署)of the Currency inthe United States are known as ____________ banks.Answer: National19. Banks which supply both debt and equity capital to businesses are known as _________ banks.Answer: merchant（商人）20. A bank that offers its services only over the internet is known as a(n) .Answer: virtual bank（虚拟银行）21.When a local merchant sells the accounts receivables they hold against their customer to a bank thisgenerally known as .Answer: discounting commercial notes22.A(n) offers loans to commercial enterprises (such asappliance dealers)or to individuals using funds borrowed in the open market or from other financial institutions.Examples of this type of financial service provider include GMAC Financial Services andHousehold Finance.Answer: finance company23.A(n) buys and sells securities on behalf of their customers and for theirown accounts. Examples of this type of financial service provider include Merrill Lynch andCharles Schwab.Answer: security broker (or dealer)24.A(n) sells shares mainly to upscale investors in a broad groupof different kinds of assets including nontraditional investments in commodities, real estate, loans to ailing companies and other risky assets.Answer: hedge fund25.When a bank agrees to handle the cash collections and disbursements for a company and invest anytemporary cash surpluses in interest bearing assets, they are providing services to their customers.Answer: cash managementTrue/False QuestionsT F 26. Under U.S. federal law, an institution making only loans to households a nd offering uninsured checkable deposits and savings deposits qualifies as a commercial bank.Answer: FalseT F 27. Nonbank banks can offer deposits to the public, butthese deposits are not eligible（合适的） for insurance coverage by the FDIC.Answer: FalseT F 28. The etymological roots of the word "bank" trace this word back to an Italian term referring to a "money-changer's table".Answer: TrueT F 29. According to the textbook, banks are those financial institutions that today offer the widest range of financial services of any business firm in the economy.Answer: TrueT F 30. According to the delegated monitoring theory banks are able to attract borrowing customers because they pledge confidentiality.Answer: TrueT F 31. Managing the financial affairs and property of individuals and business firms falls under the type of banking service line known as cash management services.Answer: FalseT F 32. The role performed by banks in the economy in which they transform savings into credit is known as the intermediation role.Answer: TrueT F 33. The role performed by banks in which they stand behind their customers when those customers are unable to pay a debt obligation is known as the guarantor role.Answer: TrueT F 34.When banks serve as conduits（中转机构）for government policy this is referred to as their agency role.Answer: FalseT F 35. According to the textbook, high-volume banking is required to make efficient use of automation and other technological innovations.Answer: TrueT F 36. The number of independently owned banks has risen in the United States over the last decade.Answer: FalseT F 37. Money-center banks usually service local communities, towns, and cities, offering a narrow menu of services to the public.Answer: FalseT F 38. A greater proportion of major corporations have deserted the banking system in recent years to raise borrowed funds directly from the open market.Answer: TrueT F 39. The recent erosion of the banking market share relative to other financial institutions means that banking is a dying industry.Answer: FalseT F 40. Lending institutions act as delegated monitors and can diversify and reduce their risk exposure, resulting in increased safety for savers’ funds.Answer: TrueT F 41. Current theory suggests that banks exist because of imperfections in our financial system.Answer: TrueT F 42. Today U.S. banks account for approximately fifty percent of the largest banks in the world.Answer: FalseT F 43. According to the textbook, traditional banking maybe on the decline.Answer: TrueT F 44. Convergence refers to the fact that the number of bank mergers has increased in recent years.Answer: FalseT F 45. Banks which offer virtually all financial services are known as universal banks（综合银行）.Answer: TrueT F 46. Life insurance companies, securities firms, and mortgage（抵押）companies all compete with the traditional bank.Answer: TrueMultiple Choice Questions47. In the United States a commercial bank qualifies as a "bank" under federal law if it offers:A) Consumer installment loans, CDsB) Savings deposits, commercial loansC) Checking accounts, commercial loansD) Security investments, inventory loans to business customersE) Commercial deposit accounts, consumer savings plansAnswer: C48. E. F. Hutton, J.C. Penney, and Sears Roebuck are among leading firms that in the1980’s organizedcompetitors with banks that are known as:A) Nonbank BanksB) Discount Security Brokerage CompaniesC) Money Market FundsD) Finance CompaniesE) Investment Banking UnitsAnswer: A49. A study of history shows that one of the first services offered by banks was:A) Equipment LeasingB) Currency ExchangeC) Security Brokerage and UnderwritingD) Sale of Real EstateE) None of the aboveAnswer: B50. Banks perform the indispensable task of:A) Creating money without making loan.B) Absorbing the excess liquidity created by other financial institutionsC) Intermediating between surplus-spending individuals or institutions and deficit-spendingindividuals or institutionsD) Issuing risky depositsE) None of the aboveAnswer: C51. The view that depositors hire banks to analyze the financial condition of prospective borrowers andcontinually evaluate the condition of outstanding loans is referred to as:A) Delegated monitoringB) The concept of financial intermediationC) The liquidity function in bankingD) Market imperfection theoryE) The efficiency contribution of bankingAnswer: A52. Which of the following has been an important trendregarding consolidation and geographicexpansion in banks?A) Increased bank branching activityB) The formation of more holding companies to purchase smaller banksC) Mergers among some of the largest banks in the industryD) A and C aboveE) All of the above.Answer: E53. Included among leading structural trends in the U.S. banking industry in recent years are:A) The number of independently owned banks has declinedB) The average size of individual banking firms has increasedC) Entry across state lines from neighboring states has increasedD) A and B onlyE) All of the above.Answer: E54. Smaller, locally focused commercial and savings banks that offer narrower but more personalizedmenu of financial services are known as:A) Money center banksB) Community banksC) Mutual FundsD) State banksE) Fringe banks.Answer: B55. The banking services that includes executing buy and sell orders for security trading customers andmarketing new securities to raise funds for corporations andother institutions is referred to:A) Comprehensive PackagingB) Wrap-around AccountsC) Investment BankingD) Professional BankingE) None of the above.Answer: C56. A bank that wires funds for the purchase of a beach house in South Carolina for a customer inOklahoma is carrying out the __________ of banks.A) The intermediation roleB) The payment roleC) The guarantor roleD) The agency roleE) The policy roleAnswer: B57. Examples of imperfections in the financial system which allow banks to exist include which of thefollowing?A) Informational asymmetryB) Efficiency of marketsC) All individuals and businesses have full information about all investment opportunities.D) All individuals and businesses have no difficulty meeting their liquidity needs on their own.E) All of the above are examples of the imperfections that exist.Answer: A58. A bank which manages the investment portfolio and pays the bills of an elderly customer who isunable to do it for him or herself is carrying out the __________ of banks.A) The intermediation roleB) The payment roleC) The guarantor roleD) The agency roleE) The policy roleAnswer: D59. Which of the following is a trend that has affected all banks today?A) Increased isolation of banks in the U.S.B) Decreased competition from other financial institutionsC) Decreased amount of services provided by modern banksD) Rising funding costsE) Increased regulationsAnswer: D60. Which of the following is not a current trend in the banking industry?A) The number of banks is decliningB) The number of bank branches is decliningC) The number of bank services is increasingD) The number of bank competitors is increasingE) Bank industry convergenceAnswer: B61. Which of the following types of banks would most likely offer the largest number of financialservices?A) A retail bankB) A community bankC) A commercial bankD) A universal bankE) An international bankAnswer: D62. The phenomenon of convergence refers to:A) Financial service firms expanding into other product linesB) Firms reducing their product linesC) Bank merger activityD) Globalization in bankingE) Technological innovation in bankingAnswer: A63. Bank equipment leasing activity involves:A) A bank leasing its office facilities instead of buyingB) A bank buying equipment and then leasing the item to a customerC) A customer buying equipment and then leasing it to a bankD) A bank leasing computer equipmentE) None of the aboveAnswer: B64. Wholesale banks are those banks that:A) Sell at a discount relative to all commercial banksB) Only make loans to the wholesale industryC) Lend almost exclusively to farmersD) Are large banks which serve corporations and governmentE) Have only retail customersAnswer: D65.Jonathan Robbins has an account in a bank that does not have a physical branch. Jonathan does allof his banking business over the internet. What type of bankdoes Jonathan have his account at?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: A66.The Edmond National Bank serves only the City of Edmond, Oklahoma and concentrates onproviding the best possible service to this city. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community Bank（社区银行）D) Affiliated BankE) None of the aboveAnswer: C67.The Charleston Southern Bank makes loans for families to purchase new and existing homes butdoes not take deposits. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: B68.Which of the following is considered a fringe bank?A) Community BankB) Wholesale BankC) Merchant BankD) Payday LenderE) None of the aboveAnswer: D69.During the middle ages, banks encountered religious opposition because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: A70.Religious opposition decreased during the Renaissance because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: B71.Banks like the Medici Bank in Italy and the Hochstetter Bank in Germany were successful becauseand they responded well to these new needs.A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods ofmaking payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: C72.Early European banks were places for safekeeping of wealth because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The industrial revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: D73.The U.S. government wants to prevent money laundering by drug cartels. To promote this goal,they have asked banks to report any cash deposits greater than $10,000 to the government. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: E74.The Edmond Wine and Cheese shop wants to buy 30 cases of French Champagne on credit. Bankof America writes a letter of credit stating that the Edmond Wine and Cheese shop is a good risk and that if they do not payoff the loan, Bank of America will. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor（保证人） roleE) The policy roleAnswer: D75.Alexander Phua goes to his local bank and gets an insurance policy that protects him against loss incase he is in a car accident. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: C76.Chris Jones gets a cashier’s check from Wachovia Bank to make his down payment on a new home.Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: B77.The Bank, N.A. accepts deposits from thousands of individuals and lends that money to (amongothers) the Stillwater Body Shop to expand their work bays.Which of the following roles is the bank performing?A) The intermediation（仲裁） roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: A78.Major trends affecting the performance of financial firms today include all of these except:A) Greater product-line diversificationB) Reduced branchingC) Geographic diversificationD) ConvergenceE) Increasing automationAnswer: B79.The First National Bank of Lakeland makes risky loans to business to expand and grow theirbusinesses while at the same time accepting funds into checking accounts that are insured by the FDIC. Which of the following services is this bank offering to their customers?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: A80.Jonathan Wynn knows that if he wanted to purchase a Treasury Bill, the minimum amount hewould spend would be close to $10,000. He also knows that he could deposit $1,000 in a money market deposit account at abank and earn about the same rate of interest. Jonathan does not have $10,000 to invest in a Treasury Bill. If Jonathan puts his money in the bank, which service that a bank can provide is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: D81.Nick Rodr gets a loan from the First State Bank of Guthrie to purchase a new refrigerator（冰箱）for his condo. What service that a bank provides is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of a bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: E82.Drew Davis goes to his local bank to get help developinga financial plan and making investmentdecisions. Which of the more recent services banks offer is Drew taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: B83.The Bartholemew Bakery receives a lot of payments in cash. They deposit it in their local bankwho invests the money in an interest bearing account until it is needed to pay bills. Which of the financial services banks offer is the Bartholemew bakery taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: C84.MyWebCast is a new company that makes it easy for individuals to create streaming videos on theinternet to share with friends and family for a small fee. MyWebCast wants to expand theirofferings of video streaming services but needs cash to be able to do this. The Second National Bank of Oklahoma City, through a subsidiary, gives them the cash they need for an ownership share in the company. Which of the more recent services that banks offer is MyWebCast taking advantange of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: D85.Chandriga Suppiah has opened a Roth IRA with North Carolina State Bank and plans on makingregular contributions to this account until she retires. Which of the financial services is Chandriga taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: E86.Banks with less than ___________in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $10 billionD)Less than $1 trillionE)More than $1 trillionAnswer: B87.The principal functions and services offered by many financial-service firms today include:A) Lending and investing moneyB) Making payments of behalf of customers to facilitate their purchases of goods and servicesC) Managing and protecting customers’ cash and other propertyD) Assisting customers in raising and investing funds profitablyE) All of the aboveAnswer: E88.Which of the following is considered a depository financial institution?A)Mortgage companyB)Mutual fundC)Savings and Loan associationsD)Federal ReserveE)Insurance companyAnswer: C89.Which of the following is not a purpose of bank regulation:A)Guarantee minimal profitability of the banking system（保证银行体系的最低利润）B)Provide monetary stabilityC)Ensure safety and soundness of banksD)Provide competitive financial systemE)Protect consumers from abuses by banksAnswer: A90.During the financial crisis of 2007-2009, the collapse of Lehman Brothers and the bailout of BearStearns reaffirmed the importance of the fundamental principle of:A) Superior managementB) GlobalizationC) Government bailoutD) Regulatory arbitrageE) Public trust and confidence in the systemAnswer: E。

(完整版)商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap002.docx

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1. The _____________________ was created as part of the Glass Steagall Act. In the beginning itinsured deposits up to $2,500.Answer: FDIC2.The________________________ is the law that states that a bank must get approved fromtheir regulatory body in order to combine with another bank.Answer: Bank Merger Act3. One tool that the Federal Reserve uses to control the money supply is. TheFederal Reserve will buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4.The__________________________ was created in 1913 in response to a series of economicdepressions and failures. Its principal role is to serve as the lender of last resort and to stabilize the financial markets.Answer: Federal Reserve5.The __________________________ prevented banks from crossing state lines and madenational banks subject to the branching laws of their state. This act was later repealed by theRiegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6.Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem calledthe ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7.In 1980, __________________________ was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.Answer: DIDMCA158. One tool that the Federal Reserve uses to control the money supply is . The Federal Reserve willchange the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9.The first major federal banking law in the U.S. was the __________________________. This lawwas passed during the Civil War and set up a system for chartering national banks and createdthe OCC.Answer: National Banking Act10.The_________________________ was passed during the Great Depression. It separatedinvestment and commercial banks and created the FDIC.Answer: Glass-Steagall Act11.The__________________________ brought bank holding companies under the jurisdiction ofthe Federal Reserve.Answer: Bank Holding Company Act12.The__________________________ allows bank holding companies to acquire banks anywherein the United States. However, no one bank can control more than 30 percent of the deposits inany one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13. The allows banks to affiliate with insurance companies and securities firms either through a holdingcompany or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14.Customers of financial-service companies may _____________________ of having their privateinformation shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties.Answer: opt out15.The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16.The _________________ requires financial service companies to report suspicious activityin customer accounts to the Treasury Department.Answer: U.S. Patriot Act16Test Bank, Chapter 217.The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18.The _____________________ Act prohibits banks and other publicly owned firmsfrom publishing false or misleading financial performance information.Answer: Sarbanes-Oxley19. One of the main roles of the Federal Reserve today is . They have three tools that they use today tocarry out this role; open market operations, the discount rate and legal reserve requirements.Answer: monetary policy20. The is the center of authority and decision making within the Federal Reserve. It consists of sevenmembers appointed by the president for terms not exceeding 14 years. Answer: Board of Governors21. The main regulators of insurance companies are.Answer: state insurance commissions22. Federal Credit Unions are regulated and examined by.Answer: the National Credit Union Administration.23. The makes it easier for victims of identity theft to file fraud alerts and allows the public to applyfor a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24. The makes it faster and less costly for banks to clear checks. It allows for banks to electronicallysend check images instead of shipping paper checks across the country.Answer: Check 21 Act25. The was created by the National Banking Act and is part of the Treasury Department. It is theprimary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financialmarkets to combat the recent credit crisis. This “ bail-out ” bill granted the US Treasury the meansto purchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.Answer: The Emergency Economic Stabilization Act of 2008True/False Questions17T F 27. Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: FalseT F 28. In the United States, fixed fees charged for deposit insurance, regardless of how risky abank is, led to a problem known as moral hazard.Answer: TrueT F 28. Government-sponsored deposit insurance typically encourages individual depositors tomonitor their banks' behavior in accepting risk.Answer: FalseT F 29. The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F 30. The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F 31. National banks cannot merge without the prior approval of the Comptroller of theCurrency.Answer: TrueT F 32. The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F 33. The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as the CompetitiveEquality in Banking Act.Answer: FalseT F 34. Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Boardapproval.Answer: TrueT F 35. The 1994 federal interstate banking bill does not limit the percentage of statewide ornationwide deposits that an interstate banking firm is allowed to control.18Test Bank, Chapter 2Answer: FalseT F 36. The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central government andlocal governments regulate banks.Answer: FalseT F 37. The moral hazard problem of banks is caused by the fixed insurance premiums paid bybanks and causes banks to accept greater risk.Answer: TrueT F 38. When the Federal Reserve buys T-bills through its open market operations, it causes thegrowth of bank deposits and loans to decrease.Answer: FalseT F 39. When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F 40. The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F 41. FIRREA (1989) allowed bank holding companies to acquire nonblank depositoryinstitutions and, if desired, convert them into branch offices.Answer: TrueT F 42. The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F 43. The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F 44. Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F 45. The tool used by the Federal Reserve System to influence the economy and behavior of19banks is known as moral hazard.Answer: FalseT F 46. One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A)Banks are leading repositories of the public's savings.B)Banks have the power to create money.C)Banks provide businesses and individuals with loans that support consumption and investmentspending.D)Banks assist governments in conducting economic policy, collecting taxes anddispensing government payments.E)All of the above.Answer: E48.An institutional arrangement in which federal and state authorities both have significant bankregulatory powers is referred to as:A)Balance of PowerB)FederalismC)Dual Banking SystemD)Cooperative RegulationE)Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A)National Bank ActB)McFadden-Pepper ActC)Glass-Steagall ActD)Bank Merger ActE)Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offeringinvestment banking services on privately issued securities is known as:A)The Glass-Steagall ActB)The Bank Merger ActC)The Depository Institutions Deregulation and Monetary Control ActD)The Federal Reserve ActE)None of the AboveAnswer: A20Test Bank, Chapter 251.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linkinggovernment supervision of the financial-services firm to the types of activities that the firmundertakes. For example the insurance portion of the firm would be regulated by state insurance commissions and the banking portion of the firm would be regulated by banking regulators. This approach to government supervision of financial services is known as:A)Consolidated regulation and supervision.B)Functional regulation.C)Services oversight.D)Umbrella supervision and regulation.E)None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure tobear on individuals and institutions to conform to the Fed's policies, using letters, phone calls,and speeches, is known as:A)Margin requirementsB)Moral suasionC)Discount window supervisionD)Conference and compromiseE)None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A)The Glass-Steagall ActB)The Federal Deposit Insurance Corporation Improvement ActC)The National Bank ActD)The Riegle-Neal Interstate Banking and Branching Efficiency Act.E)None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A)The National Banking Act.B)The McFadden-Pepper Act.C)The Glass Steagall Act.D)The Federal Reserve Act.E)None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the NationalBanking Act (1863)?A)Protection of the public's savingsB)Control of the money supplyC)Providing support for government activitiesD)Maintaining confidence in the banking systemE)Preventing banks from realizing monopoly powers2156.Of the principal reasons for regulating banks, what was the primary purpose of the FederalReserve Act of 1913?A)Protection of the public's savingsB)Control of the money supplyC)Preventing banks from realizing monopoly powersD)Ensuring an adequate and fair supply of loansE)None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to paya competitive interest rate is:A)The National Banking Act.B)The Glass Steagall Act.C)The Bank Merger Act.D)DIDMCAE)None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms toform financial services conglomerates isA)The National Banking ActB)The Glass Steagall ActC)The Garn St. Germain ActD)The Riegle Neal Interstate Banking ActE)The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E59.Of the principal reasons for regulating banks, what was the primary purpose of the Truthin Lending Law?A)Protection of the public's savingsB)Control of the money supplyC)Preventing banks from realizing monopoly powersD)Ensuring an adequate and fair supply of loansE)None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A)What should be done about the regulatory safety net set up to protect small depositors?B)If financial institutions are allowed to take on more risk, how can taxpayers be protectedfrom paying the bill when more institutions fail?C)Does functional regulation actually work?D)Should regulators allow the mixing of banking and commerce?E)All of the above are unresolved issues22Test Bank, Chapter 261.The law that made bank and nonbank depository institutions more alike in the services they couldoffer and allowed banks and thrifts to more fully compete with other financial institutions is:A)The National Banking ActB)The Federal Reserve ActC)The Garn-St. Germain ActD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions andconvert them to branches is:A)The National Banking ActB)The Garn-St. Germain ActC)FIRREAD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A)European UnionB)Bank of LondonC)Basle GroupD)European Central BankE)Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA)Financial Holding CompanyB)Bank Holding CompanyC)European Central BankD)Financial Service CorporationE)Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identitieswith government agencies is:A)The Sarbanes-Oxley ActB)The U.S. Treasury Department ActC)The 9/11 ActD)The USA Patriot ActE)The Gramm-Leach-Bliley ActAnswer: D2366. The 1977 law that prevents banks from“ redliningrtainneighborhoods,”ce refusing to serve thoseareas is:A)The National Banking ActB)The Garn-St. Germain ActC)FIRREAD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are basedon the riskiness of their assets is imposed by:A)The National Banking ActB)FIRREAC)The International Banking ActD)The Basel AgreementE)None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A)Financial statement misrepresentationB)Bank robberiesC)Individual privacy violationsD)Credit card fraudE)Identity theftAnswer: E69.The oldest federal bank agency is the:A)OCCB)FDICC)FRSD)FHCE)BHCAnswer: A70.The federal agency that regulates the most banks is the:A)OCCB)FDICC)FRSD)FHCE)BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity ofany customers opening new accounts?A)Sarbanes-Oxley ActB)USA Patriot Act24Test Bank, Chapter 2C)Check 21 ActD)The FACT ActE)Bankruptcy Abuse Prevention and Consumer ProtectionAct Answer: B72.Which federal banking act prohibits publishing false or misleading information about the financialperformance of a public company and requires top corporate officers to vouch for the accuracy of their company ’ s financial statements?A)Sarbanes-Oxley ActB)USA Patriot ActC)Check 21 ActD)The FACT ActE)Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across the country?A)Sarbanes-Oxley ActB)USA Patriot ActC)Check 21 ActD)The FACT ActE)Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74. Which federal banking act forces more individuals to repay at least part of what they owe and willpush higher-income borrowers into more costly forms of bankruptcy?A)Sarbanes-Oxley ActB)USA Patriot ActC)Check 21 ActD)The FACT ActE)Bankruptcy Abuse Prevention and Consumer ProtectionAct Answer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victimsof identity theft to make theft reports and requires credit bureaus to help victims resolve theproblem?A)Sarbanes-Oxley ActB)USA Patriot ActC)Check 21 ActD)The FACT ActE)Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D76.The _________ allows adequately capitalized bank holding companies to acquire banks in anystate.A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)Competitive Equality Banking Act25C)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary ControlAct Answer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by GeorgeStigler. He contends that:A)Firms in regulated industries actually seek out regulations because they bringmonopolistic rents.B)Regulations shelter firms from changes in demand and cost, lowering its risk.C)Regulations can increase consumer confidence which increases customer loyalty toregulated firms.D)Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E)None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks. Hecontends that:A)Firms in regulated industries actually seek out regulations because they bringmonopolistic rents.B)Regulations shelter firms from changes in demand and cost, lowering its risk.C)Regulations can increase consumer confidence which increases customer loyalty toregulated firms.D)Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E)None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all.George Benston contends that:A)Firms in regulated industries actually seek out regulations because they bringmonopolistic rents.B)Regulations shelter firms from changes in demand and cost, lowering its risk.C)Regulations can increase consumer confidence which increases customer loyalty toregulated firms.D)Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E)None of the aboveAnswer: D80.The European Central Bank has the main goal of:A)Ensuring the economy grows at an adequate rate.B)Keeping unemployment low.C)Ensuring price stability.D)Ensuring an adequate and fair supply of loans.E)All of the aboveAnswer: C26Test Bank, Chapter 281.Which of the following has become the principal tool of central bank monetary policy today?A)Open market operationsB)Changing the discount rateC)Changing reserve requirementsD)Using moral suasionE)None of the aboveAnswer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A)Cause interest rates in the market to riseB)Cause interest rates in the market to fallC)Cause reserves held at the Federal Reserve to decreaseD)Cause a decrease in the growth of deposits and loansE)All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accountsfrom $100,000 to $250,000 and authorizes the FDIC to periodically increase depositinsurance coverage to keep up with inflation?A)Sarbanes-Oxley ActB)The Gramm-Leach-Bliley ActC)Check 21 ActD)The FACT ActE)Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A)Adds selected new service powers to depository institutionsB)Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’D)All of the aboveE)None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowedthe following:A) An emergency sale of“ bad assets”B)Temporary increase of FDIC deposit insurance to $250,000 for all depositsC)Injections of capital by the government into banks and other qualified lendersD)Closer surveillance of the mortgage market participants, such as brokers and lendersE)All of the aboveAnswer: E27。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap007

Chapter 7Risk Management for Changing Interest Rates: Asset-Liability Management and Duration TechniquesFill in the Blank Questions1. The ___________________ view of assets and liabilities held that the amount andtypes of deposits was primarily determined by customers and hence the key decisiona bank needed to make was with the assets.Answer: asset management2. Recent decades have ushered in dramatic changes in banking. The goal of__________________ was simply to gain control of the bank's sources of funds.Answer: liability management3. The__________________________ is the interest rate that equalizes the currentmarket price of a bond with the present value of the future cash flows.Answer: yield to maturity (YTM)4. The __________________ risk premium on a bond allows the investor to be compensatedfor their projected loss in purchasing power from the increase in the prices of goods and services in the future.Answer: inflation5. The __________________ shows the relationship between the time to maturity and theyield to maturity of a bond. It is usually constructed using treasury securitiessince they are assumed to have no default risk.Answer: yield curve6. The __________________ risk premium on a bond reflects the differences in the easeand ability to sell the bond in the secondary market at a favorable price.Answer: liquidity7. __________________________ are those assets which mature or must be repriced withinthe planning period.Answer: Interest-sensitive assets8. __________________________ is the difference between interest-sensitive assets andinterest-sensitive liabilities.Answer: Dollar interest-sensitive gap9. A(n)__________________________ means that the bank has more interest-sensitiveliabilities than interest-sensitive assets.Answer: negative interest-sensitive gap (liability sensitive)10. The bank's__________________________ takes into account the idea that the speed(sensitivity) of interest rate changes will differ for different types of assets and liabilities.Answer: weighted interest-sensitive gap11. __________________________ is the coordinated management of both the bank's assetsand its liabilities.Answer: Funds management12. __________________________ is the risk due to changes in market interest rates whichcan adversely affect the bank's net interest margin, assets and equity.Answer: Interest rate risk13. The__________________________ is the rate of return on a financial instrument usinga 360 day year relative to the instrument's face value.Answer: bank discount rate14. The __________________________ component of interest rates is the risk premium dueto the probability that the borrower will miss some payments or will not repay the loan.Answer: default risk premium15. __________________ is the weighted average maturity for a stream of future cashflows. It is a direct measure of price risk.Answer: Duration16. __________________________ is the difference between the dollar-weighted durationof the asset portfolio and the dollar-weighted duration of the liability portfolio.Answer: Duration gap17. A(n)__________________________ duration gap means that for a parallel increase inall interest rates the market value of net worth will tend to decline.Answer: positive18. A(n)__________________________ duration gap means that for a parallel increasein all interest rates the market value of net worth will tend to increase.Answer: negative19. The __________________ refers to the periodic fluctuations in the scale of economicactivity.Answer: business cycle20. The__________________________ is equal to the duration of each individual type ofasset weighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the asset portfolio21. The__________________________ is equal to the duration of each individual type ofliability weighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the liability portfolio22. A bank is __________________ against changes in its net worth if its duration gapis equal to zero.Answer: immunized (insulated or protected)23. The relationship between a change in an asset's price and an asset’s change inthe yield or interest rate is captured by __________________________.Answer: convexity24. The change in a financial institution's __________________ is equal to differencein the duration of the assets and liabilities times the change in the interest rate divided by the starting interest rate times the dollar amount of the assets and liabilities.Answer: net worth25. When a bank has a positive duration gap a parallel increase in the interest rateson the assets and liabilities of the bank will lead to a(n) __________________ in the bank's net worth.Answer: decrease26. When a bank has a negative duration gap a parallel decrease in the interest rateson the assets and liabilities of the bank will lead to a(n)_________________________ in the bank's net worth.Answer: decrease27. U.S. banks tend to do better when the yield curve is upward-sloping because theytend to have ____________ maturity gap positions.Answer: positive28.One government-created giant mortgage banking firms which have subsequently beenprivatized is the .Answer: FNMA or Fannie Mae (or FHLMC or Freddie Mac)29.One part of interest rate risk is .This part of interest rate risk reflects that as interest rates rise, prices of securities tend to fall.Answer: price risk30.One part of interest rate risk is .This part of interest rate risk reflects that as interest rates fall, any cash flowsthat are received before maturity are invested at a lower interest rate.Answer: reinvestment risk31.When a borrower has the right to pay off a loan early which reduced the lender’sexpected rate of return it is called .Answer: call risk32.In recent decades, banks have aggressively sought to insulate their assets andliability portfolios and profits from the ravages if interest rate changes. Manybanks now conduct their asset-liability management strategy with the help of an which often meets daily.Answer: asset-liability committee33. is interest income from loans andinvestments less interest expenses on deposits and borrowed funds divided by totalearning assets.Answer: Net interest margin (NIM)34. are those liabilities thatwhich mature or must be repriced within the planning period.Answer: Interest-sensitive liabilities35.Variable rate loans and securities are included as part offor banks.Answer: repriceable assets36.Money market deposits are included as part of forbanks.Answer: repriceable liabilities37.Interest sensitive assets less interest sensitive liabilities divided by totalassets of the bank is known as .Answer: relative interest sensitive gap38.Interest sensitive assets divided by interest sensitive liabilities is knownas .Answer: Interest sensitivity ratio39. is a measure of interest rateexposure which is the total difference in dollars between those assets andliabilities that can be repriced over a designated time period.Answer: Cumulative gap40. is the phenomenon that interest ratesattached to various assets often change by different amounts and at different speeds than interest rates attached to various liabilities,Answer: basis riskTrue/False QuestionsT F 41. Usually the principal goal of asset-liability management is to maximize or at least stabilize a bank's margin or spread.Answer: TrueT F 42. Asset management strategy in banking assumes that the amount and kinds of deposits and other borrowed funds a bank attracts are determined largely byits management.Answer: FalseT F 43. The ultimate goal of liability management is to gain control over a financial institution's sources of funds.Answer: TrueT F 44. If interest rates fall when a bank is in an asset-sensitive position its net interest margin will rise.Answer: FalseT F 45. A liability-sensitive bank will experience an increase in its net interest margin if interest rates rise.Answer: FalseT F 46. Under the so-called liability management view in banking the key control lever banks possess over the volume and mix of their liabilities is price.Answer: TrueT F 47. Under the so-called funds management view bank management's control over assets must be coordinated with its control over liabilities so that assetand liability management are internally consistent.Answer: TrueT F 48. Bankers cannot determine the level or trend of market interest rates; instead, they can only react to the level and trend of rates.Answer: TrueT F 49. Short-term interest rates tend to rise more slowly than long-term interest rates and to fall more slowly when all interest rates in the market are headeddown.Answer: FalseT F 50. A financial institution is liability sensitive if its interest-sensitive liabilities are less than its interest-sensitive assets.Answer: FalseT F 51. If a bank's interest-sensitive assets and liabilities are equal than its interest revenues from assets and funding costs from liabilities will changeat the same rate.Answer: TrueT F 52. Banks with a positive cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: TrueT F 53. Banks with a negative cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: FalseT F 54. For most banks interest rates paid on liabilities tend to move more slowly than interest rates earned on assets.Answer: FalseT F 55. Interest-sensitive gap techniques do not consider the impact of changing interest rates on stockholders equity.Answer: TrueT F 56. Interest-sensitive gap, relative interest-sensitive gap and the interest-sensitivity ratio will often reach different conclusions as towhether the bank is asset or liability sensitive.Answer: FalseT F 57. The yield curve is constructed using corporate bonds with different default risks so the bank can determine the risk/return tradeoff for default risk.Answer: FalseT F 58. Financial securities that are the same in all other ways may have differences in interest rates that reflect the differences in the ease of selling thesecurity in the secondary market at a favorable price.Answer: TrueT F 59. Financial institutions face two major kinds of interest rate risk. These risks include price risk and reinvestment risk.Answer: TrueT F 60. Interest-sensitive gap and weighted interest-sensitive gap will always reach the same conclusion as to whether a bank is asset sensitive or liabilitysensitive.Answer: FalseT F 61. Weighted interest-sensitive gap is less accurate than interest-sensitive gap in determining the affect of changes in interest rates on net interest margin.Answer: FalseT F 62. A bank with a positive duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: FalseT F 63. A bank with a negative duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: TrueT F 64. Duration is a direct measure of the reinvestment risk of a bond.Answer: FalseT F 65. A bank with a positive duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: TrueT F 66. A bank with a negative duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: FalseT F 67. Duration is the weighted average maturity of a promised stream of future cash flows.Answer: TrueT F 68. Duration is a direct measure of the price risk of a bond.Answer: TrueT F 69. A bond with a greater duration will have a smaller price change in percentage terms when interest rates change.Answer: FalseT F 70. Long-term interest rates tend to change very little with the cycle of economic activity.Answer: TrueT F 71. A bank with a duration gap of zero is immunized against changes in the value of net worth due to changes in interest rates in the market.Answer: TrueT F 72. Convexity is the idea that the rate of change of an asset's price varies with the level of interest rates.Answer: TrueT F 73. The change in the market price of an asset's price from a change in market interest rates is roughly equal to the asset's duration times the change theinterest rate divided by the original interest rate.Answer: TrueT F 74. U.S. banks tend to do better when the yield curve is upward-sloping.Answer: TrueT F 75. Net interest margin tends to rise for U.S. banks when the yield curve is upward-sloping.Answer: TrueT F 76. Financial institutions laden with home mortgages tend be immune to interest-rate risk.Answer: FalseT F 77. If a Financial Institution's net interest margin is immune to interest-rate risk then so is its net worth.Answer: FalseMultiple Choice Questions78.When is interest rate risk for a bank greatestA)When interest rates are volatile.B)When interest rates are stable.C)When inflation is high.D)When inflation is low.E)When loan defaults are high.Answer: A79. A bank’s IS GAP is defined as:A)The dollar amount of rate-sensitive assets divided by the dollar amount ofrate-sensitive liabilities.B)The dollar amount of earning assets divided by the dollar amount of totalliabilities.C)The dollar amount of rate-sensitive assets minus the dollar amount ofrate-sensitive liabilities.D)The dollar amount of rate-sensitive liabilities minus the dollar amount ofrate-sensitive assets.E)The dollar amount of earning assets times the average liability interest rate.Answer: C80.According to the textbook, the maturing of the liability management techniques,coupled with more volatile interest rates, gave birth to the __________________ approach which dominates banking today. The term that correctly fills in the blank in the preceding sentence is:A) Liability managementB) Asset managementC) Risk managementD) Funds managementE) None of the above.Answer: D81.The principal goal of interest-rate hedging strategy is to hold fixed a bank's:A) Net interest marginB) Net income before taxesC) Value of loans and securitiesD) Noninterest spreadE) None of the above.Answer: A82.A bank is asset sensitive if its:A) Loans and securities are affected by changes in interest rates.B) Interest-sensitive assets exceed its interest-sensitive liabilities.C) Interest-sensitive liabilities exceed its interest-sensitive assets.D) Deposits and borrowings are affected by changes in interest rates.E) None of the above.Answer: B83.The change in a bank's net income that occurs due to changes in interest rates equalsthe overall change in market interest rates (in percentage points) times_____________. The choice below that correctly fills in the blank in the preceding sentence is:A) Volume of interest-sensitive assetsB) Price risk of the bank's assetsC) Price risk of the bank's liabilitiesD) Size of the bank's cumulative gapE) None of the above.Answer: D84.A bank with a negative interest-sensitive GAP:A) Has a greater dollar volume of interest-sensitive liabilities thaninterest-sensitive assets.B) Will generate a higher interest margin if interest rates rise.C) Will generate a higher interest margin if interest rates fall.D) A and B.E) A and C.Answer: E85.The net interest margin of a bank is influenced by:A) Changes in the level of interest rates.B) Changes in the volume of interest-bearing assets and interest-bearingliabilities.C) Changes in the mix of assets and liabilities in the bank's portfolio.D) All of the above.E) A and B only.Answer: D86.The discount rate that equalizes the current market value of a loan or securitywith the expected stream of future income payments from that loan or security is known as the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the above.Answer: B87.The interest-rate measure often quoted on short-term loans and money marketsecurities such as . Treasury bills is the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the aboveAnswer: A88.A bank whose interest-sensitive assets total $350 million and itsinterest-sensitive liabilities amount to $175 million has:A) An asset-sensitive gap of 525 millionB) A liability-sensitive gap of $175 millionC) An asset-sensitive gap of $175 millionD) A liability-sensitive gap of $350 millionE) None of the above.Answer: C89. A bank has a 1-year $1,000,000 loan outstanding, payable in four equal quarterlyinstallments. What dollar amount of the loan would be considered rate sensitive in the 0 – 90 day bucketA)$0B)$250,000C)$500,000D)$750,000E)$1,000,000Answer: B90.A bank has Federal funds totaling $25 million with an interest rate sensitivityweight of . This bank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of and respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of . What is the weighted interest-sensitive gap for this bankA) $B) $-15C) -$D) $E) None of the aboveAnswer: A91.A bond has a face value of $1000 and five years to maturity. This bond has a couponrate of 13 percent and is selling in the market today for $902. Coupon payments are made annually on this bond. What is the yield to maturity (YTM) for this bondA) 13%B) %C) 16%D) %E) Cannot be calculated from the information givenAnswer: C92.A treasury bill currently sells for $9,845, has a face value of $10,000 and has46 days to maturity. What is the bank discount rate on this securityA) %B) %C) %D) 2%E) None of the aboveAnswer: B93.The _______________ is determined by the demand and supply for loanable fundsin the market. The term that correctly fills in the blank in the preceding sentence is:A) The yield to maturityB) The banker's discount rateC) The holding period returnD) The risk-free real rate of interestE) The market rate of interest on a risky loanAnswer: D94. A bank with a positive interest-sensitive gap will have a decrease in net interestincome when interest rates in the market:A) RiseB) FallC) Stay the sameD) A bank with a positive interest-sensitive gap will never have a decrease in netinterest incomeAnswer: B95.The fact that a consumer who purchases a particular basket of goods for $100 todayhas to pay $105 next year for the same basket of goods is an example of which of the following risks:A) Inflation riskB) Default riskC) Liquidity riskD) Price riskE) Maturity riskAnswer: A96.A bank has Federal Funds totaling $25 million with an interest rate sensitivityweight of . This bank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of and respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of . What is the dollar interest-sensitive gap for this bankA) $B) $-15C) -$D) $E) None of the aboveAnswer: B97.If a bank has a positive GAP, an increase in interest rates will cause interestincome to __________, interest expense to__________, and net interest income to __________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, increase, increaseAnswer: A98.If a bank has a negative GAP, a decrease in interest rates will cause interest incometo __________, interest expense to__________, and net interest income to__________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, decrease, increaseAnswer: E99.A treasury bill currently sells for $9,845, has a face value of $10,000 and has46 days to maturity. What is the yield to maturity on this securityA) %B) %C) %D) 2%E) None of the aboveAnswer: A100.The Third National Bank of Edmond reports a net interest margin of %. It has total interest revenues of $275 million and total interest expenses of $210 million. What does this bank's earnings assets have to beA) $4717 millionB) $3602 millionC) $1115 millionD) $ millionE) None of the aboveAnswer: C101.The Third National Bank of Edmond reports a net interest margin of %. It has total interest revenues of $275 million and total interest expenses of $210 million. This bank has earnings assets of $1115. Suppose this bank's interest revenues rise by 8 percent and its interest expenses and earnings assets rise by10 percent next year. What is this bank's new net interest marginA) %B) %C) %D) %E) %Answer: D102. Which of the following is part of funds managementA) The goal of funds management is simply to gain control over the bank's fundssources.B) Since the amount of deposits a bank holds is determined largely by its customers,the focus of the bank should be on managing the assets of the bank.C) Management of the bank's assets must be coordinated with management of the bank'sliabilities.D) The spread between interest revenues and interest expenses is unimportant.E) None of the aboveAnswer: C103. If Fifth National Bank's asset duration exceeds its liability duration and interest rates rise, this will tend to __________________ the market value of the bank's net worth.A) LowerB) RaiseC) StabilizeD) Not affectE) None of the aboveAnswer: A104.If Main Street Bank has $100 million in commercial loans with an average duration of years; $40 million in consumer loans with an average duration of years; and $30 million in . Treasury bonds with an average duration of 6 years, what is Main Street's asset portfolio durationA) yearsB) yearsC) yearsD) yearsE) None of the aboveAnswer: B105.A bank has an average asset duration of years and an average liability duration of years. This bank has $750 million in total assets and $500 million in total liabilities. This bank has:A) A positive duration gap of years.B) A negative duration gap of years.C) A positive duration gap of years.D) A positive duration gap of years.E) None of the above.Answer: D106.A bank has an average asset duration of years and an average liability duration of years. This bank has $250 million in total assets and $225 million in total liabilities. This bank has:A) A negative duration gap of years.B) A positive duration gap of years.C) A negative duration gap of years.D) A negative duration gap of years.E) None of the above.Answer: D107.The duration of a bond is the weighted average maturity of the future cash flows expected to be received on a bond. Which of the following is a true statement concerning durationA) The longer the time to maturity, the greater the durationB) The higher the coupon rate, the higher the durationC) The shorter the duration, the greater the price volatilityD) All of the above are trueE) None of the above are trueAnswer: A108.A bond has a duration of years. Its current market price is $1125. Interest rates in the market are 7% today. It has been forecasted that interest rates will rise to 9% over the next couple of weeks. How will this bank's price change in percentage termsA) This bond's price will rise by 2 percent.B) This bond's price will fall by 2 percent.C) This bond's price will fall by 14 .02 percentD) This bond's price will rise by percentE) This bond's price will not changeAnswer: C109.A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to 8 percent), what is this bank's change in net worthA) Net worth will decrease by $ millionB) Net worth will increase by $ millionC) Net worth will increase by $ millionD) Net worth will decrease by $ millionE) Net worth will not change at allAnswer: B110.A bank has an average asset duration of 5 years and an average liability durationof 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to 8 percent), what is this bank's duration gapA) 2 yearsB) –2 yearsC) yearsD) – yearsE) None of the aboveAnswer: C111.A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, market interest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank's change in net worthA) Net worth will decrease by $ millionB) Net worth will increase by $ millionC) Net worth will decrease by $ millionD) Net worth will increase by $ millionE) Net worth will not change at allAnswer: B112.A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, market interest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank's duration gapA) –4 yearsB) 4 yearsC) yearsD) – yearsE) yearsAnswer: D113.A bank has $100 million of investment grade bonds with a duration of years. This bank also has $500 million of commercial loans with a duration of years. This bank has $300 million of consumer loans with a duration of years. This bank has deposits of $600 million with a duration of years and nondeposit borrowings of $100 million with an average duration of .25 years. What is this bank's duration gap These are all of the assets and liabilities this bank has.A) This bank has a duration gap of yearsB) This bank has a duration gap of yearsC) This bank has a duration gap of yearsD) This bank has a duration gap of yearsE) This bank has a duration gap of yearsAnswer: D114. Which of the following statements is true concerning a bank's duration gapA) If a bank has a positive duration gap and interest rates rise, the bank's networth will declineB) A bank with a positive duration gap has a longer average duration for its assetsthan for its liabilitiesC) If a bank has a zero duration gap and interest rates rise, the bank's net worthwill not changeD) If a bank has a negative duration gap and interest rates rise, the bank's net。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap001

Chapter 1An Overview of the Changing Financial-Services SectorFill in the Blank Questions1. _______________________ is a traditional service provided by banks in which the banks store thevaluables of their customers and certify their true value.Answer: Safekeeping of valuables2. The fact that financial institutions make loans based on confidential information is the_______________________ theory of banking.Answer: delegated monitoring3. _______________________ refers to when a financial institution trades one form of currency foranother. An example of this would be when the bank trades dollars for yen for a fee.Answer: currency exchange4.A(n) _______________________ is a traditional service which permits a depositor to write a draft（汇票）in payment for goods and services.Answer: demand deposit (checking account)5. _______________________ is a service provided by banks where the bank lends money toindividuals for the purchase of durable and other goods.Answer: Consumer lending6. The _______________________ of a bank is a traditional service where the bank manages thefinancial affairs and property of individuals (and in some cases businesses).Answer: trust services7. Companies such as Merrill Lynch and Sears which offered some but not all banking services in the1980s were called _______________________.Answer: nonbank banks8. The loosening of government regulation and control of financial institutions is called_______________________.Answer: deregulation9. ___________________________ is an alternative to lending in which the financial institutionpurchases the equipment and rents it to its customers.Answer: Equipment leasing services10. The___________________________ is a landmark act which allows financial service providers tooffer an expanded menu of financial services for the customer. This law allows banks to trulybecome conglomerate financial service providers.Answer: Financial Services Modernization Act (Gramm-Leach-Bliley Act)11. The country with the most banks is _______________________.Answer: United States12. According to Congress a ____________ is defined as any institution that can qualify for depositinsurance administered by the FDIC.Answer: Bank13. A bank which spans regions, nations, and continents, offering the widest menu of financial servicesis known as a __________bank.Answer: money-center bank14. _____________ refers to the movement of businesses across industry lines in order to broaden itsbase.Answer: Convergence15. Banks which serve primarily households and small firms are known as ____________ banks.Answer: retail16. Banks that sell deposits and make loans to businesses and individuals are known as ______banks.Answer: commercial17. Banks which underwrite issues of new securities for their corporate customers are known as________ banks.Answer: investment2Test Bank, Chapter 118. Banks which function under a federal charter through the Comptroller (审计署)of the Currency inthe United States are known as ____________ banks.Answer: National19. Banks which supply both debt and equity capital to businesses are known as _________ banks.Answer: merchant（商人）20. A bank that offers its services only over the internet is known as a(n) .Answer: virtual bank（虚拟银行）21.When a local merchant sells the accounts receivables they hold against their customer to a bank thisgenerally known as .Answer: discounting commercial notes22.A(n) offers loans to commercial enterprises (such as appliance dealers)or to individuals using funds borrowed in the open market or from other financial institutions.Examples of this type of financial service provider include GMAC Financial Services andHousehold Finance.Answer: finance company23.A(n) buys and sells securities on behalf of their customers and for theirown accounts. Examples of this type of financial service provider include Merrill Lynch andCharles Schwab.Answer: security broker (or dealer)24.A(n) sells shares mainly to upscale investors in a broad groupof different kinds of assets including nontraditional investments in commodities, real estate, loans to ailing companies and other risky assets.Answer: hedge fund25.When a bank agrees to handle the cash collections and disbursements for a company and invest anytemporary cash surpluses in interest bearing assets, they are providing services to their customers.Answer: cash managementTrue/False QuestionsT F 26. Under U.S. federal law, an institution making only loans to households a nd offering uninsured checkable deposits and savings deposits qualifies as a commercial bank.Answer: FalseRose/Hudgins, Bank Management and Financial Services, 8/e 3T F 27. Nonbank banks can offer deposits to the public, but these deposits are not eligible（合适的） for insurance coverage by the FDIC.Answer: FalseT F 28. The etymological roots of the word "bank" trace this word back to an Italian term referring to a "money-changer's table".Answer: TrueT F 29. According to the textbook, banks are those financial institutions that today offer the widest range of financial services of any business firm in the economy.Answer: TrueT F 30. According to the delegated monitoring theory banks are able to attract borrowing customers because they pledge confidentiality.Answer: TrueT F 31. Managing the financial affairs and property of individuals and business firms falls under the type of banking service line known as cash management services.Answer: FalseT F 32. The role performed by banks in the economy in which they transform savings into credit is known as the intermediation role.Answer: TrueT F 33. The role performed by banks in which they stand behind their customers when those customers are unable to pay a debt obligation is known as the guarantor role.Answer: TrueT F 34.When banks serve as conduits（中转机构） for government policy this is referred to as their agency role.Answer: FalseT F 35. According to the textbook, high-volume banking is required to make efficient use of automation and other technological innovations.Answer: TrueT F 36. The number of independently owned banks has risen in the United States over the last decade.4Test Bank, Chapter 1Answer: FalseT F 37. Money-center banks usually service local communities, towns, and cities, offering a narrow menu of services to the public.Answer: FalseT F 38. A greater proportion of major corporations have deserted the banking system in recent years to raise borrowed funds directly from the open market.Answer: TrueT F 39. The recent erosion of the banking market share relative to other financial institutions means that banking is a dying industry.Answer: FalseT F 40. Lending institutions act as delegated monitors and can diversify and reduce their risk exposure, resulting in increased safety for savers’ funds.Answer: TrueT F 41. Current theory suggests that banks exist because of imperfections in our financial system.Answer: TrueT F 42. Today U.S. banks account for approximately fifty percent of the largest banks in the world.Answer: FalseT F 43. According to the textbook, traditional banking may be on the decline.Answer: TrueT F 44. Convergence refers to the fact that the number of bank mergers has increased in recent years.Answer: FalseT F 45. Banks which offer virtually all financial services are known as universal banks（综合银行）.Answer: TrueT F 46. Life insurance companies, securities firms, and mortgage（抵押） companies all compete with the traditional bank.Answer: TrueRose/Hudgins, Bank Management and Financial Services, 8/e 5Multiple Choice Questions47. In the United States a commercial bank qualifies as a "bank" under federal law if it offers:A) Consumer installment loans, CDsB) Savings deposits, commercial loansC) Checking accounts, commercial loansD) Security investments, inventory loans to business customersE) Commercial deposit accounts, consumer savings plansAnswer: C48. E. F. Hutton, J.C. Penney, and Sears Roebuck are among leading firms that in the1980’s organizedcompetitors with banks that are known as:A) Nonbank BanksB) Discount Security Brokerage CompaniesC) Money Market FundsD) Finance CompaniesE) Investment Banking UnitsAnswer: A49. A study of history shows that one of the first services offered by banks was:A) Equipment LeasingB) Currency ExchangeC) Security Brokerage and UnderwritingD) Sale of Real EstateE) None of the aboveAnswer: B50. Banks perform the indispensable task of:A) Creating money without making loan.B) Absorbing the excess liquidity created by other financial institutionsC) Intermediating between surplus-spending individuals or institutions and deficit-spendingindividuals or institutionsD) Issuing risky depositsE) None of the aboveAnswer: C6Test Bank, Chapter 151. The view that depositors hire banks to analyze the financial condition of prospective borrowers andcontinually evaluate the condition of outstanding loans is referred to as:A) Delegated monitoringB) The concept of financial intermediationC) The liquidity function in bankingD) Market imperfection theoryE) The efficiency contribution of bankingAnswer: A52. Which of the following has been an important trend regarding consolidation and geographicexpansion in banks?A) Increased bank branching activityB) The formation of more holding companies to purchase smaller banksC) Mergers among some of the largest banks in the industryD) A and C aboveE) All of the above.Answer: E53. Included among leading structural trends in the U.S. banking industry in recent years are:A) The number of independently owned banks has declinedB) The average size of individual banking firms has increasedC) Entry across state lines from neighboring states has increasedD) A and B onlyE) All of the above.Answer: E54. Smaller, locally focused commercial and savings banks that offer narrower but more personalizedmenu of financial services are known as:A) Money center banksB) Community banksC) Mutual FundsD) State banksE) Fringe banks.Answer: B55. The banking services that includes executing buy and sell orders for security trading customers andmarketing new securities to raise funds for corporations and other institutions is referred to:A) Comprehensive PackagingB) Wrap-around AccountsC) Investment BankingD) Professional BankingE) None of the above.Answer: C56. A bank that wires funds for the purchase of a beach house in South Carolina for a customer inOklahoma is carrying out the __________ of banks.Rose/Hudgins, Bank Management and Financial Services, 8/e 7A) The intermediation roleB) The payment roleC) The guarantor roleD) The agency roleE) The policy roleAnswer: B57. Examples of imperfections in the financial system which allow banks to exist include which of thefollowing?A) Informational asymmetryB) Efficiency of marketsC) All individuals and businesses have full information about all investment opportunities.D) All individuals and businesses have no difficulty meeting their liquidity needs on their own.E) All of the above are examples of the imperfections that exist.Answer: A58. A bank which manages the investment portfolio and pays the bills of an elderly customer who isunable to do it for him or herself is carrying out the __________ of banks.A) The intermediation roleB) The payment roleC) The guarantor roleD) The agency roleE) The policy roleAnswer: D59. Which of the following is a trend that has affected all banks today?A) Increased isolation of banks in the U.S.B) Decreased competition from other financial institutionsC) Decreased amount of services provided by modern banksD) Rising funding costsE) Increased regulationsAnswer: D60. Which of the following is not a current trend in the banking industry?A) The number of banks is decliningB) The number of bank branches is decliningC) The number of bank services is increasingD) The number of bank competitors is increasingE) Bank industry convergenceAnswer: B8Test Bank, Chapter 161. Which of the following types of banks would most likely offer the largest number of financialservices?A) A retail bankB) A community bankC) A commercial bankD) A universal bankE) An international bankAnswer: D62. The phenomenon of convergence refers to:A) Financial service firms expanding into other product linesB) Firms reducing their product linesC) Bank merger activityD) Globalization in bankingE) Technological innovation in bankingAnswer: A63. Bank equipment leasing activity involves:A) A bank leasing its office facilities instead of buyingB) A bank buying equipment and then leasing the item to a customerC) A customer buying equipment and then leasing it to a bankD) A bank leasing computer equipmentE) None of the aboveAnswer: B64. Wholesale banks are those banks that:A) Sell at a discount relative to all commercial banksB) Only make loans to the wholesale industryC) Lend almost exclusively to farmersD) Are large banks which serve corporations and governmentE) Have only retail customersAnswer: D65.Jonathan Robbins has an account in a bank that does not have a physical branch. Jonathan does allof his banking business over the internet. What type of bank does Jonathan have his account at?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: A66.The Edmond National Bank serves only the City of Edmond, Oklahoma and concentrates onproviding the best possible service to this city. What type of bank is this most likely to be?A) Virtual BankRose/Hudgins, Bank Management and Financial Services, 8/e 9B) Mortgage BankC) Community Bank（社区银行）D) Affiliated BankE) None of the aboveAnswer: C67.The Charleston Southern Bank makes loans for families to purchase new and existing homes butdoes not take deposits. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: B68.Which of the following is considered a fringe bank?A) Community BankB) Wholesale BankC) Merchant BankD) Payday LenderE) None of the aboveAnswer: D69.During the middle ages, banks encountered religious opposition because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: A70.Religious opposition decreased during the Renaissance because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: B71.Banks like the Medici Bank in Italy and the Hochstetter Bank in Germany were successful becauseand they responded well to these new needs.A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the above10Test Bank, Chapter 1Answer: C72.Early European banks were places for safekeeping of wealth because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The industrial revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: D73.The U.S. government wants to prevent money laundering by drug cartels. To promote this goal,they have asked banks to report any cash deposits greater than $10,000 to the government. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: E74.The Edmond Wine and Cheese shop wants to buy 30 cases of French Champagne on credit. Bankof America writes a letter of credit stating that the Edmond Wine and Cheese shop is a good risk and that if they do not pay off the loan, Bank of America will. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor（保证人） roleE) The policy roleAnswer: D75.Alexander Phua goes to his local bank and gets an insurance policy that protects him against loss incase he is in a car accident. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: C76.Chris Jones gets a cashier’s check from Wachovia Bank to make his down payment on a new home.Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: B77.The Bank, N.A. accepts deposits from thousands of individuals and lends that money to (amongothers) the Stillwater Body Shop to expand their work bays. Which of the following roles is the bank performing?A) The intermediation（仲裁） roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: A78.Major trends affecting the performance of financial firms today include all of these except:A) Greater product-line diversificationB) Reduced branchingC) Geographic diversificationD) ConvergenceE) Increasing automationAnswer: B79.The First National Bank of Lakeland makes risky loans to business to expand and grow theirbusinesses while at the same time accepting funds into checking accounts that are insured by the FDIC. Which of the following services is this bank offering to their customers?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: A80.Jonathan Wynn knows that if he wanted to purchase a Treasury Bill, the minimum amount hewould spend would be close to $10,000. He also knows that he could deposit $1,000 in a money market deposit account at a bank and earn about the same rate of interest. Jonathan does not have $10,000 to invest in a Treasury Bill. If Jonathan puts his money in the bank, which service that a bank can provide is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: D81.Nick Rodr gets a loan from the First State Bank of Guthrie to purchase a new refrigerator（冰箱）for his condo. What service that a bank provides is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of a bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: E82.Drew Davis goes to his local bank to get help developing a financial plan and making investmentdecisions. Which of the more recent services banks offer is Drew taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: B83.The Bartholemew Bakery receives a lot of payments in cash. They deposit it in their local bankwho invests the money in an interest bearing account until it is needed to pay bills. Which of the financial services banks offer is the Bartholemew bakery taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: C84.MyWebCast is a new company that makes it easy for individuals to create streaming videos on theinternet to share with friends and family for a small fee. MyWebCast wants to expand theirofferings of video streaming services but needs cash to be able to do this. The Second National Bank of Oklahoma City, through a subsidiary, gives them the cash they need for an ownership share in the company. Which of the more recent services that banks offer is MyWebCast taking advantange of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: D85.Chandriga Suppiah has opened a Roth IRA with North Carolina State Bank and plans on makingregular contributions to this account until she retires. Which of the financial services is Chandriga taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: E86.Banks with less than ___________in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $10 billionD)Less than $1 trillionE)More than $1 trillionAnswer: B87.The principal functions and services offered by many financial-service firms today include:A) Lending and investing moneyB) Making payments of behalf of customers to facilitate their purchases of goods and servicesC) Managing and protecting customers’ cash and other propertyD) Assisting customers in raising and investing funds profitablyE) All of the aboveAnswer: E88.Which of the following is considered a depository financial institution?A)Mortgage companyB)Mutual fundC)Savings and Loan associationsD)Federal ReserveE)Insurance companyAnswer: C89.Which of the following is not a purpose of bank regulation:A)Guarantee minimal profitability of the banking system（保证银行体系的最低利润）B)Provide monetary stabilityC)Ensure safety and soundness of banksD)Provide competitive financial systemE)Protect consumers from abuses by banksAnswer: A90.During the financial crisis of 2007-2009, the collapse of Lehman Brothers and the bailout of BearStearns reaffirmed the importance of the fundamental principle of:A) Superior managementB) GlobalizationC) Government bailoutD) Regulatory arbitrageE) Public trust and confidence in the systemAnswer: E。

商业银行管理彼得S.罗斯英文原书第8版-英语试题库Chap005

Chapter 5The Financial Statements of Banks and Their Principal CompetitorsFill in the Blank Questions1. Fed funds purchased is an example of ______________________ along with Eurodollarborrowings. Answer: nondeposit borrowings2. The short term securities of the bank, including T-Bills and commercial paper, are often calledbecause they are the second line of defense to meet demands for cash. Answer: secondary reserves3. is a noncash expense on the bank's income statement whichallows the bank to account for future bad loans. Answer: Provision for loan losses4. ________________________ is the difference between interest income and interest expensesfor a financial institution. Answer: Net interest income5. ________________________ are the primary long term liabilities of the bank. These liabilitiesare paid only after deposits have been paid in the event of bankruptcy. Answer: Subordinated notes and debentures6. A(n) _________________________ is where the financial institution agrees to guaranteerepayment of a customer's loan received from a third party. Answer: standby credit agreement7. A(n) _________________________ is a short term collateralized loan. The collateral that is usedgenerally consists of T-Bills. Answer: repurchase agreement8. A(n) _________________________ is a deposit account which pays an interest rate competitivewith money market mutual funds and which generally has limited check writing ability. Answer:money market deposit account57 / 229. __________________ is the sum of all outstanding IOU's owed to the bank in the form ofconsumer, real estate, commercial and agriculture loans as well as other types of credit extensions.Answer: gross loans10. A financial institution often records the value of its assets and liabilities at ______________which is the original or historical cost of the asset.Answer: book value11. The principal types of _________________________ include fee income, income from fiduciaryactivities and services charges on deposits. Answer: noninterest income12. The __________________________ shows the amount of revenues received and expenses incurredover a specific time period. Answer: Report of Income (income statement)13. The __________________________ lists the assets, liabilities and equity capital held by the bankon a given date.Answer: Report of Condition (balance sheet)14. ____________ is labeled "Accounting for Derivative Instruments and Hedging Activities."Answer: FASB 13315. ______________ labeled “ Accounting for Derivative Instruments and Hedging Activitiesits recent amendments, FASB 138, are designed to make derivatives more publicly visible on corporate financial statements.Answer: FASB 13316. Under ____________ banks must account for the expected loss of interest income onnonperforming loans when calculating their loan-loss provision. Answer: FASB 11417. Temporarily buying and selling securities by a securities firm in a thinly traded market so as to influencethe price is known as ________________________ .Answer: painting the tape18. The activity of manipulating the financial statements to artificially enhance the banks financial strength isknown as __________________________ .Answer: window dressing or ‘ creative accounting '19. is direct and indirect investment in real estate. These areproperties obtained for compensations for nonperforming loans.Answer: Other Real Estate Owned (OREO)20. consists of interest income received on loans from customers thathas not yet been earned by the bank under accrual accounting methods.Answer: Unearned discount income21. can be held by individuals and nonprofit institutions, bear interest and permit drafts from being writtenagainst the account to pay third parties. Answer: Now accounts22. In the worldwide banking system, represent transferable time deposits ina variety of currencies and are often the principal source of short term borrows by banks. Answer:Eurocurrency Borrowings23. One part of arises from fees charged for ATM and POS transactions.Answer: Other Noninterest Income24. Fees that arise from a financial firm ' s trust activities, fees for managing a corporationsdividend payments and fees for managing corporate or individual retirement plans are all included in the category of fees arising from .Answer: fiduciary activities25. Checking account maintenance fees and overdraft fees are included in the noninterest incomeaccount under . Answer: service charges on deposit accountsTrue/False QuestionsT F 26. On a bank's income statement (Report of Income) deposit costs are financial inputs. Answer: True T F 27. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.Answer: TrueT F 28. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition.Answer: True59 / 22T F 29. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.Answer: TrueT F 30. Securities income is a financial output listed on a financial institution's Report of Condition.Answer: FalseT F 31. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.Answer: TrueT F 32. When a loan is classified as nonperforming any accrued interest recorded on the bank's books, but not actually received, must be deducted from a bank's loan revenues.Answer: TrueT F 33. In U.S. banking, securities gains are treated as ordinary income. Answer: TrueT F 34. Most banks report securities gains as a component of their total noninterest income. Answer: False T F 35. A bank displaying trading account securities on its balance sheet is serving as a security dealer and plans to sell those securities before they reach maturity.Answer: TrueT F 36. Bad loans normally do not affect a bank's current income. Answer: TrueT F 37. The expensing of a worthless loan usually must occur in the year that loan become worthless.Answer: TrueT F 38. Recoveries on loans previously charged off are added to the Provision for Loan Losses (PLL) account on a bank's income statement.Answer: FalseT F 39. Loan-loss reserves set aside to cover a particular loan or loans expected to be a problem or present the bank with above-average risk are known as specific reserves.Answer: TrueT F 40. U.S. banks (especially those with $500 million or more in total assets) are required to statements audited by an independent public accountant with their principal federal regulatory agency.Answer: TrueT F 41. Off-balance-sheet items for a bank are fee generating transactions which are not recorded on their balance sheet.Answer: TrueT F 42. The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to .6 percent of their eligible loans.Answer: FalseT F 43. After the Tax Reform Act of 1986, large banks (>$500 million in assets) were required to use the reserve method of accounting for future loan loss reserves.Answer: FalseT F 44. The number one source of revenue for a bank based on dollar volume is loan income. Answer: TrueT F 45. In looking at comparative balance sheets, it can be seen that large banks rely more heavily on nondeposit borrowings while small banks rely more heavily on deposits.Answer: TrueT F 46. The Pension Fund industry is now larger than the Mutual Fund industry. Answer: FalseT F 47. Off-balance-sheet items for banks have declined in recent years. Answer: FalseT F 48. Except for banks, Savings & Loans and Savings Banks hold the most deposits. Answer: TrueT F 49. "Painting the tape" refers to the practice whereby banks understate their nonperforming loans.Answer: False61 / 22T F 50. Financial statements issued by banks and nonblank financial service firms are looking increasingly similar today.Answer: TrueMultiple Choice Questions51. Bank assets fall into each of the following categories except:A) Loans.B) Investment securities.C) Demand deposits.D) Noninterest cash and due from banks.E) Other assets.Answer: C52. Banks generate their largest portion of income from:A) Loans.B) Short-term investment.C) Demand deposits.D) Long-term investments.E) Certificates of deposit.Answer: A53. Loans typically fall into each of the following categories except:A) Real estate.B) Consumer.C) Commercial and Industrial (business).D) Agricultural.E) Municipal. Answer: E54. Which of the following adjustments are made to gross loans and leases to obtain net loans andleases?A) The loan and lease loss allowance is subtracted from gross loansB) Unearned income is subtracted from gross interest receivedC) Investment income is added to gross interest receivedD) A and B.E) A. and C.Answer: D55. An example of a contra-asset account is:A) The loan and lease loss allowance.B) Unearned income.C) Buildings and equipment.D) Revenue bonds.E) The provision for loan loss. Answer: A56. The noncash expense item on a bank's Report of Income designed to shelter a bank's currentearnings from taxes and to help prepare for bad loans is called:A) Short-term debt interestB) Noninterest expenseC) Provision for taxesD) Provision for possible loan lossesE) None of the above.Answer: D57. A financial institution's bad-debt reserve, as reported on its balance sheet, is called:A) Unearned income or discountB) Allowance for possible loan lossesC) Intangible assetsD) Customer liability on acceptancesE) None of the aboveAnswer: B58. When a bank serves as a security dealer for certain kinds of securities (mainly federal, state, andlocal government obligations) the value of these securities is usually recorded in what account on a bank's Report of Condition?A) Investment SecuritiesB) Taxable and Tax-Exempt SecuritiesC) Trading Account SecuritiesD) Secondary ReservesE) None of the above Answer: C59. The difference between noninterest income and noninterest expenses on a bank's Report of Incomeis called:A) Net Profit MarginB) Net Interest IncomeC) Net Income After Provision for Possible Loan LossesD) Income or Loss Before Income TaxesE) Net Noninterest Income Answer: E60. The account that is built up by annual noncash expense deductions and is subtracted from GrossLoans on the Report of Condition is:A) Unearned incomeB) Nonperforming loansC) Allocated loan risk deductionsD) Allowance for possible loan lossesE) None of the above. Answer: D61. Nonperforming loans are credits on which any scheduled loan repayments and interest payments63 / 22are past due for more than:A) 30 daysB) 60 daysC) 90 daysD) 180 daysE) None of the above.Answer: C62. One-time only transactions that often involve financial assets or real property pledged as collateralbehind a loan and upon which the bank has foreclosed affect a bank's account known as:A) Allowance for loan lossesB) Nonrecurring sales of assetsC) Asset gains or lossesD) Provision for loan and security lossesE) None of the above. Answer: B63. The use of fixed assets, rather than financial assets, in order to increase earnings flowing to a bank'sstockholders is known as:A) Plant and equipment investmentB) Financial leverageC) Operating leverageD) Nondeposit capitalE) None of the above. Answer: C64. Banks depend heavily upon borrowed funds supplied by customers with little owners' capitalinvested. This means that banks make heavy use of:A) Financial leverageB) Capital restructuringC) Operating LeverageD) Margin borrowingE) None of the above.Answer: A65. When a loan is considered uncollectible, the bank's accounting department will write (charge) it offthe books by reducing the _____ and the accounts. Which choice below correctly fills in the blank in the preceding sentence?A) PLL and Gross LoansB) ALL and Net LoansC) ALL and Gross LoansD) PLL and Net LoansE) None of the above.Answer: C66. The common banking practice of selling those investment securities that have appreciated in order toreap a capital gain and holding onto those securities whose prices have declined is known as:A) Gains tradingB) Performance bankingC) Loss control tradingD) Selective portfolio managementE) None of the above. Answer: A67. Noninterest revenue sources for a bank are called:A) Commitment fees on loansB) Fee incomeC) Supplemental incomeD) Noninterest marginE) None of the above.Answer: B68. Large U.S. banks must use which of the methods listed below to determine their provision for loanloss expense?A) Experience methodB) Reserve methodC) Specific charge-off methodD) Historical cost methodE) None of the above. Answer: C69. A bank's temporary lending of excess reserves to other banks is labeled on the balance sheet as:A) Fed Funds PurchasedB) Fed Funds SoldC) Money Market DepositsD) Securities Purchased for ResaleE) None of the aboveAnswer: B70. A bank sells shares of its common stock with a par value of $100 for $200 in the market. Which twoaccounts on the bank's balance sheet are going to be affected?A) Retained earnings and capital surplus accountsB) Subordinated notes and debentures and commons stock outstanding accountsC) Retained earnings and common stock outstanding accountsD) Common stock outstanding and capital surplus accountsE) Only the common stock outstanding account is affectedAnswer: D71. A type of letter of credit which is widely used in international trade is known as:A) Banker's acceptance65 / 22B) Commercial paperC) Repurchase agreementD) Fed funds purchasedE) None of the above Answer: A72. A bank which starts with ALL of $1.48 million at the beginning of the year, charges off worthlessloans of $.94 million during the year, recovers $.12 million on loans previously charged off andcharges current income for a $1.02 million provision for loan losses will have an ALL at the end of the year of:A) $.66 millionB) $3.32 millionC) $1.68 millionD) $1.28 millionE) The same amount as at the beginning of the year Answer: C73. A bank that has total interest income of $67 million and total noninterest income of $14 million. Thisbank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net interest income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: D74. A bank that has total interest income of $67 million and total noninterest income of $14 million. Thisbank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's netnoninterest income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: B75. A bank that has total interest income of $67 million and total noninterest income of $14 million. Thisbank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net income?A) $7B) -$14C) $18D) $32E) None of the above Answer: A76. Which of the following financial statements shows the revenues and expense of a bank over a setperiod of time?A) The statement of stockholders equityB) The funds-flow statementC) The report of financial conditionD) The report of incomeE) None of the above Answer: D77. Which of the following accounts is sometimes called the bank's primary reserves?A) Cash and deposits due from bankB) Investment securitiesC) Trading account securitiesD) Fed funds soldE) None of the aboveAnswer: A78. Which of the following assets is the largest asset item on the bank's balance sheet?A) SecuritiesB) CashC) LoansD) Bank PremisesE) None of the aboveAnswer: C79. What financial service industry category is second to the banking industry in total assets held:A) Mutual fundsB) ThriftsC) Investment banksD) Insurance companiesE) Pension fundsAnswer: A80. FASB Rule 115 focuses primarily on bank:A) Deposit sourcesB) Investments in marketable securitiesC) Derivatives tradingD) Loan-loss reservesE) Federal fundsAnswer: B67 / 2281. Which of the following most accurately describes the principal type(s) of bank noninterest income:A) Fees from fiduciary transactionsB) Fees from deposit transactionsC) Fees from securities transactionsD) Fees from additional noninterest incomeE) All of the aboveAnswer: E82. Fee income arising from fiduciary transactions include all of the following except:A) Checking account maintenance feesB) Fees for managing and protecting a customer ' s propertyC) Fees for recordkeeping for corporate securityD) Fees for dispersing interest and dividend payments for a corporationE) Fees for managing corporate and individual retirement plans Answer: A83. You know the following information about the Miller State Bank:Gross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm ' s Net Loans?A) $250B) $350C) $500D) $50E) $150Answer: A84. You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment SecuritiesNet PremisesSurplusAllowance for Loan Losses DepositsTotal AssetsGross Premises $150 $40 $5 $50 $390 $500 $70Given this information, w hat is this firm s Depreciation?A) $250B) $30C) $70D) $40E) $110Answer: B85. You know the following information about the Miller State BankGross Loans Miscellaneous Assets DepositsTotal EquityCommon Stock ParNon-Deposit Borrowings Investment SecuritiesNet PremisesSurplusAllowance for Loan Losses DepositsTotal AssetsGross Premises $300 $50 $390 $50 $5 $60 $150 $40 $5 $50 $390 $500 $70Given this information, what is this firm s Total Liabilities?A) $390B) $60C) $450D) $500E) $50Answer: C86. You know the following information about the Miller State BankGross Loans Miscellaneous Assets DepositsTotal EquityCommon Stock Par Non-Deposit Borrowings Investment Securities Net PremisesSurplus $300 $50 $390 $50 $5 $60 $150 $40 $569 / 22Allowance for Loan Losses DepositsTotal AssetsGross Premises $50 $390 $500 $70Given this information, what is this firmA) $50B) $5C) $10D) $40E) $450Answer: D's Undivided Profits?87. You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50 Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm ' s Total Liabilities Plus Equity?A) $250B) $450C) $150D) $50E) $500Answer: E88. You know the following information about the Davis National BankTotal Interest ExpensesTotal Non Interest Income Securities Gains (Losses) Income TaxesDividends to Stockholders Total Interest IncomeTotal Non Interest Expenses Provision for Loan Losses($500) $100 $ 50($ 80) ($ 40) $800($150)($100)Given this information, what is this firm 's Net Interest Income?A) $300B) $150C) ($50)D) $120E) $80Answer: A89. You know the following information about the Davis National BankTotal Interest ExpensesTotal Non Interest IncomeSecurities Gains (Losses)Income TaxesDividends to Stockholders Total Interest IncomeTotal Non Interest Expenses Provision for Loan Losses ($500)$100 $ 50 ($ 80) ($ 40) $800 ($150) ($100)Given this information, wha t is this firmA) $300B) $150C) ($50)D) $120E) $80Answer: C' s Net Non Interest Income?Total Interest Expenses Total Non Interest Income ($500) $100Total Interest Expenses Total Non Interest Income SecuritiesGains (Losses) Income Taxes Dividends to Stockholders Total Interest Income Total Non Interest Expenses Provision for Loan Losses ($500) $100 $ 50 ($ 80) ($ 40) $800 ($150) ($100)Given this information, what is this firmExtraordinary Items)?s Pretax Net O'perating Income (or Net Income beforeA) $300B) $150C) ($50)D) $120E) $80Answer: B91. You know the following information about the Davis National Bank90. You know the following information about the Davis National Bank71 / 22Securities Gains (Losses) $ 50 Income Taxes($ 80) Dividends to Stockholders ($ 40) Total Interest Income$800 Total Non Interest Expenses ($150) Provision for Loan Losses ($100)Given this information, what is this firmA) $300 B) $150 C) ($50) D) $120 E) $80Answer: D 92. You know the following information about the Davis National Bank93. You know the following information about the Davis National Bank($500) $100 $ 50 ($ 80) ($ 40) $800 ($150) ($100)Given this information, what is thi s firm ' s Total Reven?u esA) $800 B) $850 C) $150D) $950 Answer: D's Net Income? Total Interest Expenses ($500) Total Non Interest Income $100 Securities Gains (Losses) $ 50 Income Taxes($ 80) Dividends to Stockholders ($ 40) Total Interest Income $800 Total Non Interest Expenses ($150) Provision for Loan Losses ($100)Given this information, what is this firm A) $300 B) $150 C) ($50) D) $120 E) $80 Answer: E' s Increase in Undivided Profits?Total Interest Expenses Total Non Interest Income Securities Gains (Losses) Income Taxes Dividends to Stockholders Total Interest Income Total Non Interest Expenses Provision for Loan Losses94. You know the following information about the Webb State Bank73 / 22Accumulated Depreciation $40Net Loans $600 Fed Funds Purchased and Repurchase Agreements $200 Cash and Due from Banks $50 Trading Account Securities $40 Miscellaneous Assets $100 Deposits $500 Undivided Profits $140 Gross Premises $90 Surplus $40 Subordinated Debt $100 Investment Securities $160 Common Stock Par $20 Gross Loans $700Given this information, what is this firm A) $1300 B) $1000 C) $50 D) $200 E) $100 s Allowance for Loan Losses? Answer: E 95. You know the following information about the Webb State Bank Accumulated Depreciation Net Loans $40 $600 Fed Funds Purchased and Repurchase Agreements $200 Cash and Due from Banks $50 Trading Account Securities $40 Miscellaneous Assets $100 Deposits $500 Undivided Profits $140 Gross Premises $90 Surplus $40 Subordinated Debt $100 Investment Securities $160 Common Stock Par $20Gross LoansGiven this information, what is this firm $700 s NetPremises?A) $130 B) $1000 C) $50 D) $200 E) $100 An swer: C96. You know the following information about the Webb State BankAccumulated Depreciation $40 Net Loans $600 Fed Funds Purchased and Repurchase Agreements $200 Cash and Due from Banks $50 Trading Account Securities $40 Miscellaneous Assets $100 Deposits $500 Undivided Profits $140 Gross Premises $90 Surplus $40 Subordinated Debt $100 Investment Securities $160 Common Stock Par $20 Gross Loans $700Given this information, what is this firm ' s Total Non Deposit Borrowings? A) $1000B) $300 C) $800 D) $200 E) $500Answer: B 97. You know the following information about the Webb State BankAccumulated Depreciation Net Loans Fed Funds Purchased and Repurchase Agreements $200 Cash and Due from Banks $50 Trading Account Securities $40 Miscellaneous Assets $100 Deposits $500 Undivided Profits $140 Gross Premises $90 Surplus $40 Subordinated Debt $100 Investment Securities $160 Common Stock Par $20 Gross Loans Given this information, what is this firm A) $1000 B) $300 C) $800 D) $200 E) $500 Answer: C$40 $600 $700 s TotalLiabilities?98. You know the following information about the Webb State Bank75 / 22Accumulated Depreciation $40 Net Loans $600 Fed Funds Purchased and Repurchase Agreements $200 Cash and Due from Banks $50 Trading Account Securities $40 Miscellaneous Assets $100 Deposits $500 Undivided Profits $140 Gross Premises $90 Surplus $40 Subordinated Debt $100 Investment Securities $160 Common Stock Par $20 Gross Loans $700Given this information, what is this firm ' s Total Equity?A) $1000 B) $300 C) $800 D) $200 E) $500Answer: D 99. You know the following information about the Webb State BankAccumulated Depreciation Net Loans Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks Trading Account Securities MiscellaneousAssetsDepositsUndivided Profits Gross Premises SurplusSubordinated Debt Investment SecuritiesCommon Stock Par Gross Loans Given this information, what is this firm A) $1000 B) $300 C) $800 D) $200 E) $500 Answer: A$40 $600 $50$40 $100 $500 $140 $90$40$100$160 $20 $700 ' s Total Assets?100. You know the following information about the Taylor National BankGiven this information, what is this firm s Net Operating IncomBee ofor rNee t IncomeProvision for Loan Losses Income Taxes Non Interest Income Dividends Securities Gains (Losses) Interest IncomeNon Interest Expense Interest Expenses ($100) ($140) $500 ($60) ($50) $1500 $750 $750Given this information, what is this firm s Net Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: E101. You know the following information about the Taylor National BankProvision for Loan Losses Income TaxesNon Interest Income DividendsSecurities Gains (Losses) Interest IncomeNon Interest Expense Interest Expenses ($100) ($140) $500 ($60) ($50) $1500 $750 $750Given this information, what is this firm s Net Non Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: D102. You know the following information about the Taylor National BankProvision for Loan Losses Income Taxes Non Interest Income Dividends Securities Gains (Losses) Interest IncomeNon Interest Expense Interest Expenses ($100) ($140) $500 ($60) ($50) $1500 $750 $750Extraordinary Income?A) $150B) $210C) $400D) ($250)E) $750Answer: C 103. You know the following information about the Taylor National BankProvision for Loan LossesIncome TaxesNon Interest IncomeDividendsSecurities Gains (Losses)Interest IncomeNon Interest ExpenseInterest ExpensesGiven this information, what is this firmA) $150B) $210C) $400D) ($250)E) $750Answer: B 104. You know the following information about the Taylor National BankProvision for Loan Losses Income TaxesNon Interest Income DividendsSecurities Gains (Losses) Interest Income Non Interest Expense Interest Expenses ($100)($140)$500($60)($50)$1500$750$750s Increase in Uitnsd?i vided ProfAnswer: A105. You know the following information about the Taylor National BankProvision for Loan Losses Income Taxes($100) ($140) ($100) ($140) $500 ($60) ($50) $1500 $750$750s Net Income?Given this information, what is this firmA) $150B) $210C) $400D) ($250)E) $75077 / 22。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap001

Chapter 1An Overview of the Changing Financial-Services SectorFill in the Blank Questions1._______________________ is a traditional service provided by banks in which the banks storethe valuables of their customers and certify their true value.Answer: Safekeeping of valuables2.The fact that financial institutions make loans based on confidential information is the_______________________ theory of banking.Answer: delegated monitoring3._______________________ refers to when a financial institution trades one form of currency foranother. An example of this would be when the bank trades dollars for yen for a fee.Answer: currency exchange4.A(n) _______________________ is a traditional service which permits a depositor to write adraft （汇票）in payment for goods and services.Answer: demand deposit (checking account)5._______________________ is a service provided by banks where the bank lends money toindividuals for the purchase of durable and other goods.Answer: Consumer lending6.The _______________________ of a bank is a traditional service where the bank manages thefinancial affairs and property of individuals (and in some cases businesses).Answer: trust servicespanies such as Merrill Lynch and Sears which offered some but not all banking services inthe 1980s were called _______________________.Answer: nonbank banks8.The loosening of government regulation and control of financial institutions is called_______________________.Answer: deregulation9.___________________________ is an alternative to lending in which the financial institutionpurchases the equipment and rents it to its customers.Answer: Equipment leasing services10.The___________________________ is a landmark act which allows financial service providersto offer an expanded menu of financial services for the customer. This law allows banks to truly become conglomerate financial service providers.Answer: Financial Services Modernization Act (Gramm-Leach-Bliley Act)11.The country with the most banks is _______________________.Answer: United States12.According to Congress a ____________ is defined as any institution that can qualify for depositinsurance administered by the FDIC.Answer: Bank13. A bank which spans regions, nations, and continents, offering the widest menu of financialservices is known as a __________bank.Answer: money-center bank14._____________ refers to the movement of businesses across industry lines in order to broaden itsbase.Answer: Convergence15.Banks which serve primarily households and small firms are known as ____________ banks.Answer: retail16.Banks that sell deposits and make loans to businesses and individuals are known as ______banks.Answer: commercial17.Banks which underwrite issues of new securities for their corporate customers are known as________ banks.Answer: investment18.Banks which function under a federal charter through the Comptroller (审计署)of the Currency inthe United States are known as ____________ banks.Answer: National19.Banks which supply both debt and equity capital to businesses are known as _________ banks.Answer: merchant（商人）20. A bank that offers its services only over the internet is known as a(n) .Answer: virtual bank（虚拟银行）21.When a local merchant sells the accounts receivables they hold against their customer to a bankthis generally known as .Answer: discounting commercial notes22.A(n) offers loans to commercial enterprises (such as appliancedealers) or to individuals using funds borrowed in the open market or from other financialinstitutions. Examples of this type of financial service provider include GMAC FinancialServices and Household Finance.Answer: finance company23.A(n) buys and sells securities on behalf of their customers and fortheir own accounts. Examples of this type of financial service provider include Merrill Lynchand Charles Schwab.Answer: security broker (or dealer)24.A(n) sells shares mainly to upscale investors in a broadgroup of different kinds of assets including nontraditional investments in commodities, realestate, loans to ailing companies and other risky assets.Answer: hedge fund25.When a bank agrees to handle the cash collections and disbursements for a company and investany temporary cash surpluses in interest bearing assets, they are providing services to their customers.Answer: cash managementTrue/False QuestionsT F26.Under U.S. federal law, an institution making only loans to households a nd offering uninsured checkable deposits and savings deposits qualifies as a commercial bank.Answer: FalseT F27.Nonbank banks can offer deposits to the public, but these deposits are not eligible（合适的） for insurance coverage by the FDIC.Answer: FalseT F28.The etymological roots of the word "bank" trace this word back to an Italian term referring to a "money-changer's table".Answer: TrueT F29.According to the textbook, banks are those financial institutions that today offer the widest range of financial services of any business firm in the economy.Answer: TrueT F30.According to the delegated monitoring theory banks are able to attract borrowing customers because they pledge confidentiality.Answer: TrueT F31.Managing the financial affairs and property of individuals and business firms falls under the type of banking service line known as cash management services.Answer: FalseT F32.The role performed by banks in the economy in which they transform savings into credit is known as the intermediation role.Answer: TrueT F33.The role performed by banks in which they stand behind their customers when those customers are unable to pay a debt obligation is known as the guarantor role.Answer: TrueT F34.When banks serve as conduits（中转机构） for government policy this is referred to as their agency role.Answer: FalseT F35.According to the textbook, high-volume banking is required to make efficient use of automation and other technological innovations.Answer: TrueT F36.The number of independently owned banks has risen in the United States over the last decade.Answer: FalseT F37.Money-center banks usually service local communities, towns, and cities, offering a narrow menu of services to the public.Answer: FalseT F38. A greater proportion of major corporations have deserted the banking system in recent years to raise borrowed funds directly from the open market.Answer: TrueT F39.The recent erosion of the banking market share relative to other financial institutions means that banking is a dying industry.Answer: FalseT F40.Lending institutions act as delegated monitors and can diversify and reduce their risk exposure, resulting in increased safety for savers’ funds.Answer: TrueT F41.Current theory suggests that banks exist because of imperfections in our financial system.Answer: TrueT F42.Today U.S. banks account for approximately fifty percent of the largest banks in the world.Answer: FalseT F43.According to the textbook, traditional banking may be on the decline.Answer: TrueT F44.Convergence refers to the fact that the number of bank mergers has increased in recent years.Answer: FalseT F45.Banks which offer virtually all financial services are known as universal banks（综合银行）.Answer: TrueT F46.Life insurance companies, securities firms, and mortgage（抵押） companies all compete with the traditional bank.Answer: TrueMultiple Choice Questions47.In the United States a commercial bank qualifies as a "bank" under federal law if it offers:A)Consumer installment loans, CDsB)Savings deposits, commercial loansC)Checking accounts, commercial loansD)Security investments, inventory loans to business customersE)Commercial deposit accounts, consumer savings plansAnswer: C48. E. F. Hutton, J.C. Penney, and Sears Roebuck are among leading firms that in the1980’sorganized competitors with banks that are known as:A)Nonbank BanksB)Discount Security Brokerage CompaniesC)Money Market FundsD)Finance CompaniesE)Investment Banking UnitsAnswer: A49. A study of history shows that one of the first services offered by banks was:A)Equipment LeasingB)Currency ExchangeC)Security Brokerage and UnderwritingD)Sale of Real EstateE)None of the aboveAnswer: B50.Banks perform the indispensable task of:A)Creating money without making loan.B)Absorbing the excess liquidity created by other financial institutionsC)Intermediating between surplus-spending individuals or institutions and deficit-spendingindividuals or institutionsD)Issuing risky depositsE)None of the aboveAnswer: C51.The view that depositors hire banks to analyze the financial condition of prospective borrowersand continually evaluate the condition of outstanding loans is referred to as:A)Delegated monitoringB)The concept of financial intermediationC)The liquidity function in bankingD)Market imperfection theoryE)The efficiency contribution of bankingAnswer: A52. Which of the following has been an important trend regarding consolidation and geographicexpansion in banks?A)Increased bank branching activityB)The formation of more holding companies to purchase smaller banksC)Mergers among some of the largest banks in the industryD) A and C aboveE)All of the above.Answer: E53.Included among leading structural trends in the U.S. banking industry in recent years are:A)The number of independently owned banks has declinedB)The average size of individual banking firms has increasedC)Entry across state lines from neighboring states has increasedD) A and B onlyE)All of the above.Answer: E54.Smaller, locally focused commercial and savings banks that offer narrower but more personalizedmenu of financial services are known as:A)Money center banksB)Community banksC)Mutual FundsD) State banksE)Fringe banks.Answer: B55.The banking services that includes executing buy and sell orders for security trading customersand marketing new securities to raise funds for corporations and other institutions is referred to:A)Comprehensive PackagingB)Wrap-around AccountsC)Investment BankingD)Professional BankingE)None of the above.Answer: C56. A bank that wires funds for the purchase of a beach house in South Carolina for a customer inOklahoma is carrying out the __________ of banks.A)The intermediation roleB)The payment roleC)The guarantor roleD)The agency roleE)The policy roleAnswer: B57.Examples of imperfections in the financial system which allow banks to exist include which ofthe following?A)Informational asymmetryB)Efficiency of marketsC)All individuals and businesses have full information about all investment opportunities.D)All individuals and businesses have no difficulty meeting their liquidity needs on their own.E)All of the above are examples of the imperfections that exist.Answer: A58. A bank which manages the investment portfolio and pays the bills of an elderly customer who isunable to do it for him or herself is carrying out the __________ of banks.A)The intermediation roleB)The payment roleC)The guarantor roleD)The agency roleE)The policy roleAnswer: D59.Which of the following is a trend that has affected all banks today?A)Increased isolation of banks in the U.S.B)Decreased competition from other financial institutionsC)Decreased amount of services provided by modern banksD)Rising funding costsE)Increased regulationsAnswer: D60.Which of the following is not a current trend in the banking industry?A)The number of banks is decliningB)The number of bank branches is decliningC)The number of bank services is increasingD)The number of bank competitors is increasingE)Bank industry convergenceAnswer: B61.Which of the following types of banks would most likely offer the largest number of financialservices?A) A retail bankB) A community bankC) A commercial bankD) A universal bankE)An international bankAnswer: D62.The phenomenon of convergence refers to:A)Financial service firms expanding into other product linesB)Firms reducing their product linesC)Bank merger activityD)Globalization in bankingE)Technological innovation in bankingAnswer: A63.Bank equipment leasing activity involves:A) A bank leasing its office facilities instead of buyingB) A bank buying equipment and then leasing the item to a customerC) A customer buying equipment and then leasing it to a bankD) A bank leasing computer equipmentE)None of the aboveAnswer: B64.Wholesale banks are those banks that:A)Sell at a discount relative to all commercial banksB)Only make loans to the wholesale industryC)Lend almost exclusively to farmersD)Are large banks which serve corporations and governmentE)Have only retail customersAnswer: D65.Jonathan Robbins has an account in a bank that does not have a physical branch. Jonathan doesall of his banking business over the internet. What type of bank does Jonathan have his account at?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: A66.The Edmond National Bank serves only the City of Edmond, Oklahoma and concentrates onproviding the best possible service to this city. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community Bank（社区银行）D) Affiliated BankE) None of the aboveAnswer: C67.The Charleston Southern Bank makes loans for families to purchase new and existing homes butdoes not take deposits. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: B68.Which of the following is considered a fringe bank?A) Community BankB) Wholesale BankC) Merchant BankD) Payday LenderE) None of the aboveAnswer: D69.During the middle ages, banks encountered religious opposition because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: A70.Religious opposition decreased during the Renaissance because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: B71.Banks like the Medici Bank in Italy and the Hochstetter Bank in Germany were successfulbecause and they responded well to these new needs.A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: C72.Early European banks were places for safekeeping of wealth because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The industrial revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: D73.The U.S. government wants to prevent money laundering by drug cartels. To promote this goal,they have asked banks to report any cash deposits greater than $10,000 to the government.Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: E74.The Edmond Wine and Cheese shop wants to buy 30 cases of French Champagne on credit.Bank of America writes a letter of credit stating that the Edmond Wine and Cheese shop is a good risk and that if they do not pay off the loan, Bank of America will. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor（保证人） roleE) The policy roleAnswer: D75.Alexander Phua goes to his local bank and gets an insurance policy that protects him against lossin case he is in a car accident. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: C76.Chris Jones gets a cashier’s check from Wachovia Bank to make his down payment on a newhome. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: B77.The Bank, N.A. accepts deposits from thousands of individuals and lends that money to (amongothers) the Stillwater Body Shop to expand their work bays. Which of the following roles is the bank performing?A) The intermediation（仲裁） roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: A78.Major trends affecting the performance of financial firms today include all of these except:A) Greater product-line diversificationB) Reduced branchingC) Geographic diversificationD) ConvergenceE) Increasing automationAnswer: B79.The First National Bank of Lakeland makes risky loans to business to expand and grow theirbusinesses while at the same time accepting funds into checking accounts that are insured by the FDIC. Which of the following services is this bank offering to their customers?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: A80.Jonathan Wynn knows that if he wanted to purchase a Treasury Bill, the minimum amount hewould spend would be close to $10,000. He also knows that he could deposit $1,000 in a money market deposit account at a bank and earn about the same rate of interest. Jonathan does not have $10,000 to invest in a Treasury Bill. If Jonathan puts his money in the bank, which service that a bank can provide is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: D81.Nick Rodr gets a loan from the First State Bank of Guthrie to purchase a new refrigerator（冰箱）for his condo. What service that a bank provides is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of a bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: E82.Drew Davis goes to his local bank to get help developing a financial plan and making investmentdecisions. Which of the more recent services banks offer is Drew taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: B83.The Bartholemew Bakery receives a lot of payments in cash. They deposit it in their local bankwho invests the money in an interest bearing account until it is needed to pay bills. Which of the financial services banks offer is the Bartholemew bakery taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: C84.MyWebCast is a new company that makes it easy for individuals to create streaming videos onthe internet to share with friends and family for a small fee. MyWebCast wants to expand their offerings of video streaming services but needs cash to be able to do this. The Second National Bank of Oklahoma City, through a subsidiary, gives them the cash they need for an ownership share in the company. Which of the more recent services that banks offer is MyWebCast taking advantange of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: D85.Chandriga Suppiah has opened a Roth IRA with North Carolina State Bank and plans on makingregular contributions to this account until she retires. Which of the financial services isChandriga taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: E86.Banks with less than ___________in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $10 billionD)Less than $1 trillionE)More than $1 trillionAnswer: B87.The principal functions and services offered by many financial-service firms today include:A) Lending and investing moneyB) Making payments of behalf of customers to facilitate their purchases of goods and servicesC) Managing and protecting customers’ cash and other propertyD) Assisting customers in raising and investing funds profitablyE) All of the aboveAnswer: E88.Which of the following is considered a depository financial institution?A)Mortgage companyB)Mutual fundC)Savings and Loan associationsD)Federal ReserveE)Insurance companyAnswer: C89.Which of the following is not a purpose of bank regulation:A)Guarantee minimal profitability of the banking system（保证银行体系的最低利润）B)Provide monetary stabilityC)Ensure safety and soundness of banksD)Provide competitive financial systemE)Protect consumers from abuses by banksAnswer: A90.During the financial crisis of 2007-2009, the collapse of Lehman Brothers and the bailout of BearStearns reaffirmed the importance of the fundamental principle of:A) Superior managementB) GlobalizationC) Government bailoutD) Regulatory arbitrageE) Public trust and confidence in the systemAnswer: E。

商业银行管理彼得S罗斯英文原书第8版英语试题库Chap003

商业银行管理彼得S罗斯英文原书第8版英语试题库Chap003Chapter 3The Organization and Structure of Banking and the Financial-Services IndustryFill in the Blank Questions1. A(n) ___________________ is a machine located at the merchant's place of business which allowsdepositors to use their debit card to pay for purchases directly.Answer: POS2. A(n) _____________________ is a bank which offers its full range of services from severallocations.Answer: branch bank3. A(n) _____________________ is a bank which offers its full range of services from only onelocation.Answer: unit bank4. A(n)________________________ is a corporation chartered for the express purpose of holdingthe stock of one or more banks.Answer: Bank Holding Company5. Managers who value fringe benefits, plush offices and ample travel budgets over the pursuit ofmaximum returns for stockholders are exhibiting signs of __________________________.Answer: Expense Preference Behavior6.A(n) __________________________ can invest in corporate stockas sell as loan money to helpfinance the start of new ventures or support the expansion of existing businesses.Answer: Merchant bank7. A bank which operates exclusively over the internet is known as a ___________ bank.Answer: Virtual8. One new 21st century bank organizational structures is _____________________ . This is aspecial type of holding company that may offer the broadest range of financial services.Answer: Financial Holding Company (FHC)9.The key problem in a large money center bank is . Managers may beknowledgeable about banking practices but may be less informed about products and services of subsidiary companies.Answer: span of control10.The Gramm-Leach-Bliley Act moved the U.S. banking industry closer to banking inwhich banks may provide securities, insurance, and other financial products.Answer: universal11.A bank that is not associated with a bank holding company is called a(n) bank.Answer: independent12. is a view of how modern corporations operate which analyzes therelationship between a firm’s owners and its managers.Answer: Agency theory13.Many experts believe that , the relationships that existbetween managers,the board of directors and stockholders, is more complicated in financial institutions. Answer:Because of government regulations.14. is the idea that there will be a lower cost of production perunit as the firm gets larger.Answer: Economies of scale15. is the idea that there will be lower cost of producing multipleservices using the same organization and resources.Answer: Economies of scope16.Over the years, managers of banks and other financial institutions have evolved differentorganizational forms to address changes in the industry. Indeed, these firms are organized to carry out various roles in the most efficient way. This is referred to as _________________________.Answer: Organizational form follows functionTrue/False QuestionsT F 17. Bank size is not considered a significant factor in determining how banks are organized.Answer: FalseT F 18. Nearly three quarters of all U.S. banks exceed $100 million in asset size apiece.Answer: FalseT F 19. Nearly all U.S. banks with federal or state charters have their deposits insured by the Federal Deposit Insurance Corporation.Answer: TrueT F 20. State-chartered banks in the United States representabout a quarter of all U.S.-chartered banks, while national banks account for approximately three quarters of all U.S. chartered banks.Answer: FalseT F 21. The majority of all U.S. banks are members of the Federal Reserve System.Answer: FalseT F 22. A banking corporation chartered by either federal or state governments that operates only one full-service office is called a unit bank.Answer: TrueT F 23. Over half of all U.S. states today limit branching activity.Answer: FalseT F 24. The average U.S. bank is larger in size (in terms of number of branch offices) than the average Canadian bank.Answer: FalseT F 25. Despite the rapid growth of automation in U.S. banking, there are more full-service branch banking offices than automated teller machines across the whole U.S.Answer: FalseT F 26. In the United States there are more one-bank holding companies than multi-bank holding companies.Answer: TrueT F 27. Bank holding companies hold more than 90 percent of the industry’s assets in the United States.Answer: TrueT F 28. Research evidence suggests that banks taken over by interstate banking organizations have generally increased their market shares over their competitors within the same state andgenerally are more profitable than their competitors.Answer: FalseT F 29. The concentration of bank deposits at the local level (that is in urban communities and rural counties) has displayed only moderate changes in recent years.Answer: TrueT F 30. There is evidence that branch banks charge higher fees for some banking services than do unit banks.Answer: TrueT F 31. Branch banks tend to offer a wider menu of services than unit banks.Answer: FalseT F 32. Recent research suggests that branch banks tend to be more profitable than either unit or holding company banks, while interstate banks tend to be the most profitable of all.Answer: FalseT F 33. Less than 10 percent of the largest banks in the U.S. control almost 90 percent of the industry assets.Answer: TrueT F 34. Agency theory suggests that bank management will always pursue the goal of maximizing the return of the bank's shareholders.Answer: FalseT F 35. Recent research suggests that the relationship between bank size and the cost of production per unit is roughly U shaped.Answer: TrueT F 36. Bank holding companies that want to achieve the goal of risk reduction in earnings risk through interstate banking can achieve the same level of risk reduction by entering any ofthe fifty states.Answer: FalseT F 37. Bank holding companies are allowed to own nonbank businesses as long as those businesses offer services closely related to banking.Answer: TrueT F 38. Banks tend to have a higher proportion of outside directors than a typical manufacturing firm.Answer: TrueT F 39. Banks which operate entirely on the web are known as invisible banks.Answer: FalseT F 40. Banks acquired by holding companies are referred to as affiliated banks.Answer: TrueT F 41. Bank organizational structure has become more complex in recent years.Answer: TrueT F 42. There are only a very small number of unit banks in the U.S. today.Answer: FalseT F 43. Traditional brick-and-mortar bank branch offices are on the decline in the U.S. today.Answer: FalseT F 44. Community banks are usually smaller banks that are devoted principally to the markets for smaller, locally based deposits and loans.Answer: TrueT F 45. The question of whether financial firms operate as efficiently as possible requires researchers to look into the issueof x-efficiency. The concept requires an assessment of the financial firm’s operating costs in relation to its cost-efficient frontier.Answer: TrueMultiple Choice Questions46.In banking, organizational form follows __________ because banks usually are organized in such away as to carry out the tasks and supply the services demanded of them. The term that correctly fills in the blank in the sentence above is:A) Bank sizeB) Management's decisionC) FunctionD) RegulationE) LocationAnswer: C47.Which one of the following is charged with setting policy and overseeing a bank's performance?A) StockholdersB) Board of directorsC) RegulatorsD) DepositorsE) None of the above.Answer: B48.The largest banks possess some potential advantages over small and medium-size banks, accordingto the textbook. What specific advantage of the largest banks over small and medium-sized banks is not mentioned in the text?A) Greater diversification geographically and by product lineB) Availability of financial capital at lower costC) Greater professional expertise to allocate capital to the most promising products and servicesD) Better positioned to take advantage of the opportunities afforded by interstate banking.E) All of the above were mentioned in the text as advantages typically possessed by the largestbanks.Answer: E49.Before any financial services can be offered to anyone a bank in the United States must have a:A) Certificate of deposit insuranceB) Charter of incorporationC) List of established customersD) New building constructed to be the bank's permanent homeE) None of the above.Answer: B50.In the United States there are close to __________ commercial banks in operation. Which numbershown below is closest to the actual total number of U.S. banks operating in the U.S.?A) 20,500B) 13,500C) 11,500D) 9,000E) 7,500Answer: E51.One of the few states that has opted out of interstate banking is:A) New YorkB) OhioC) TexasD) MontanaE) None of the aboveAnswer: D52.The concentration of U.S. bank deposits in the hands of the largest banks has _________ during themost recent period,A) DeclinedB) IncreasedC) Remained essentially unchangedD) Exhibited large fluctuations in both directionsE) None of above.Answer: B53.Bank holding company organizations have several advantages over other types of bankingorganizations. Among the advantages mentioned in this chapter is:A) Greater ease of access to capital marketsB) Tax advantageC) Product-line diversificationD) All of the above.E) None of the above.Answer: D54.A company which owns the stock of three different banks is known as a(n):A) Unit BankB) Interstate BankC) One Bank Holding CompanyD) Multi Bank Holding CompanyE) None of the aboveAnswer: D55.Which of the following is considered an advantage of branch banking?A) Increased availability and convenience of servicesB) Decreased chance of failureC) Reduced transaction costsD) B and C aboveE) All of the aboveAnswer: E56.The types of nonbank businesses a bank holding company can own include which of the following?A) Retail Computer StoreB) Security Brokerage FirmC) Retail Grocery StoreD) Wholesale Electronic Distribution CompanyE) All of the aboveAnswer: B57.A bank which offers its full range of services from only one office is known as a:A) Unit BankB) Branch BankC) Correspondent BankD) Bank Holding CompanyE) None of the aboveAnswer: A58.Why did so many states and the federal government finally enact interstate banking laws?A) The need for new capital in order to revive struggling economiesB) The expansion of services by nonbank financial institutionsC) Competition from neighboring states that already liberalized their lawsD) Advances in technology which allowed banks to service customers in broader geographic areasE) All of the above are reasons for the passage of interstate banking lawsAnswer: E59.What is a bank holding company?A) It is a bank that offers all of its services out of one officeB) It is a bank that offers all its services out of several officesC) It is a corporation formed to hold the stock of one or more banksD) It is a merchant bankE) None of the aboveAnswer: C60.Which of the following is a type of service a bank holding company is not allowed to own?A) Merchant banking companyB) Savings and loan associationC) Retail electronics equipment sales companyD) Security brokerage firmE) Insurance agencyAnswer: C61.In the last decade, the number of banks has __________ and the number of branches has_________.A) Declined; IncreasedB) Grown; IncreasedC) Grown; DecreasedD) Declined; DecreasedE) Stabilized; StabilizedAnswer: A62.Websites known as electronic branches offer all of the following except:A) Internet banking servicesB) ATMsC) Point of sales terminalsD) Computer and phone services connecting customersE) Traveler's checksAnswer: E63.Relative to manufacturing firms, banks tend to have a (the) ___________ number of boardmembers.A) SameB) LargerC) SmallerD) UnknownE) None of the aboveAnswer: B64.The percentage of unit banks in the U.S. today is approximately:A) 10%B) 30%C) 50%D) 75%E) 100%Answer: B65.The ‘typical’ community bank has:A) $300 million in assets and is located in a smaller city in the Midwest.B) $25 billion in assets and is located in a large city in the EastC) $100 million in assets and is located in a large city the SouthD) $10 billion in assets and is located in a small city in the WestE) None of the aboveAnswer: A66.The ‘typical’ money center bank has:A) $250 million in assets and is located in a smaller city in the MidwestB) $25 billion in assets and is located in a large city in the EastC) $100 million in assets and is located in a large city in the SouthD) $10 billion in assets and is located in a small city in the WestE) None of the aboveAnswer: B67.The majority of banks today are:A) Federally charteredB) UninsuredC) State CharteredD) National BanksE) All of the aboveAnswer: C68.‘Member’ banks are:A) Members of the FDICB) National BanksC) Unit BanksD) Members of the Federal ReserveE) All of the aboveAnswer: D69. and banks tend to be larger and hold more of the public’sdeposits.A) National and MemberB) State and NonmemberC) National and UninsuredD) State and InsuredE) None of the aboveAnswer: A70.Which of the following is a reason for the rapid growth in branch banks?A) Exodus of population from cities to suburban areasB) Bank convergenceC) Business failuresD) Decreased costs of brick and mortarE) All of the aboveAnswer: A71.Under the Bank Holding Company Act control of a bank is assumed to exist only if:A) T he bank holding company acquires 100% of the bank’s stockB) The bank holding company acquires 50% or m ore of the bank’s stockC) T he bank holding company acquires 25% or more the bank’s stockD) The bank holding company acquires three banksE) None of the aboveAnswer: C72.When a bank holding company acquires a nonbank business it must be approved by:A) The FDICB) The Comptroller of the CurrencyC) The Federal ReserveD) The President of the U.S.E) All of the aboveAnswer: C73.Many financial experts believe that the customers most likely to be damaged by decreasedcompetition include:A) Large corporations in large citiesB) Households and business in smaller cities and townsC) Households that earn more than a billion dollars a yearD) Students away at collegeE) None of the aboveAnswer: B74.According to Levonian and Rose in order to achieve some reduction in earnings risk,interstate banks must expand into at least:A) 2 statesB) 4 statesC) 6 statesD) 10 statesE) 25 statesAnswer: B75.The major competitors of banks have:A) Fewer but much larger service providersB) Fewer but smaller service providersC) More but smaller service providersD) More but larger service providersE) None of the aboveAnswer: A76.Of the following countries in Europe, which has the largest number of banks?A) BelgiumB) FranceC) GermanyD) Great BritainE) None of the aboveAnswer: C77.Which country’s banks were owned by the state until the 1990’s?A) BelgiumB) FranceC) GermanyD) ItalyE) None of the aboveAnswer: D78.When financial service providers offer a range of services including banking, insuranceand securities services it is known as:A) ConsolidationB) ConvergenceC) Economies of scaleD) E-EfficienciesE) None of the aboveAnswer: B79.The gradual evolution of markets and institutions suchthat geographic boundaries do notrestrict financial transactions is known as:A)DeregulationB)IntegrationC)Re-regulationD)GlobalizationE)Moral suasionAnswer: D80.Banks with less than _______ in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $5 millionD)Less than $1 trillionE)More than $1 trillionAnswer: B81.Nonbank financial firms that supply insurance coverage to customers borrowing money toguarantee repayment of a loan are referred to as:A) Merchant BankersB) Factoring CompaniesC) Savings AssociationsD) Investment BankersE) Credit Insurance UnderwritersAnswer: E82.A financial holding companies (FHC), defined as a special type of holding company thatmay offer the broadest range of financial services such as securities and insurance activities, were allowed under which act?A) Riegle-Neal Interstate Banking and Branching EfficiencyActB) The Competitive Equality in Banking ActC) The Basel AgreementD) The FDIC Improvement ActE) The Gramm-Leach-Bliley Financial Services Modernization Act Answer: E。

(完整版)商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap002

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1. The _____________________ was created as part of the Glass Steagall Act. In the beginning itinsured deposits up to $2,500.Answer: FDIC2. The________________________ is the law that states that a bank must get approved from theirregulatory body in order to combine with another bank.Answer: Bank Merger Act3. One tool that the Federal Reserve uses to control the money supply is _________________ . TheFederal Reserve will buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4. The__________________________ was created in 1913 in response to a series of economicdepressions and failures. Its principal role is to serve as the lender of last resort and to stabilize the financial markets.Answer: Federal Reserve5. The __________________________ prevented banks from crossing state lines and made nationalbanks subject to the branching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6. Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem calledthe ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7. In 1980, __________________________ was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.Answer: DIDMCA158. One tool that the Federal Reserve uses to control the money supply is _________________. TheFederal Reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9. The first major federal banking law in the U.S. was the __________________________. This lawwas passed during the Civil War and set up a system for chartering national banks and created the OCC.Answer: National Banking Act10. The_________________________ was passed during the Great Depression. It separatedinvestment and commercial banks and created the FDIC.Answer: Glass-Steagall Act11. The__________________________ brought bank holding companies under the jurisdiction of theFederal Reserve.Answer: Bank Holding Company Act12. The__________________________ allows bank holding companies to acquire banks anywhere inthe United States. However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13. The allows banks to affiliate with insurance companies and securitiesfirms either through a holding company or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14. Customers of financial-service companies may _____________________ of having their privateinformation shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties.Answer: opt out15. The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16. The _________________ requires financial service companies to report suspicious activity incustomer accounts to the Treasury Department.Answer: U.S. Patriot Act17. The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18. The _____________________ Act prohibits banks and other publicly owned firms frompublishing false or misleading financial performance information.Answer: Sarbanes-Oxley19.One of the main roles of the Federal Reserve today is . They have three tools thatthey use today to carry out this role; open market operations, the discount rate and legal reserverequirements.Answer: monetary policy20.The is the center of authority and decision making within the FederalReserve. It consists of seven members appointed by the president for terms not exceeding 14 years.Answer: Board of Governors21.The main regulators of insurance companies are .Answer: state insurance commissions22.Federal Credit Unions are regulated and examined by .Answer: the National Credit Union Administration.23.The makes it easier for victims of identity theft to file fraud alertsand allows the public to apply for a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24.The makes it faster and less costly for banks to clear checks. Itallows for banks to electronically send check images instead of shipping paper checks across the country.Answer: Check 21 Act25.The was created by the National Banking Act and is part of theTreasury Department. It is the primary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financial marketsto combat the recent credit crisis. T his “bail-out” bill granted the US Treasury the means topurchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.Answer: The Emergency Economic Stabilization Act of 2008True/False Questions17T F 27. Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: FalseT F 28. In the United States, fixed fees charged for deposit insurance, regardless of how risky a bank is, led to a problem known as moral hazard.Answer: TrueT F 28. Government-sponsored deposit insurance typically encourages individual depositors to monitor their banks' behavior in accepting risk.Answer: FalseT F 29. The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F 30. The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F 31. National banks cannot merge without the prior approval of the Comptroller of the Currency.Answer: TrueT F 32. The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F 33. The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as the CompetitiveEquality in Banking Act.Answer: FalseT F 34. Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Boardapproval.Answer: TrueT F 35. The 1994 federal interstate banking bill does not limit the percentage of statewide or nationwide deposits that an interstate banking firm is allowed to control.Answer: FalseT F 36. The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central governmentand local governments regulate banks.Answer: FalseT F 37. The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk.Answer: TrueT F 38. When the Federal Reserve buys T-bills through its open market operations, it causes the growth of bank deposits and loans to decrease.Answer: FalseT F 39. When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F 40. The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F 41. FIRREA (1989) allowed bank holding companies to acquire nonblank depository institutions and, if desired, convert them into branch offices.Answer: TrueT F 42. The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F 43. The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F 44. Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F 45. The tool used by the Federal Reserve System to influence the economy and behavior of19banks is known as moral hazard.Answer: FalseT F 46. One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A) Banks are leading repositories of the public's savings.B) Banks have the power to create money.C) Banks provide businesses and individuals with loans that support consumption and investmentspending.D) Banks assist governments in conducting economic policy, collecting taxes and dispensinggovernment payments.E) All of the above.Answer: E48.An institutional arrangement in which federal and state authorities both have significant bankregulatory powers is referred to as:A) Balance of PowerB) FederalismC) Dual Banking SystemD) Cooperative RegulationE) Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A) National Bank ActB) McFadden-Pepper ActC) Glass-Steagall ActD) Bank Merger ActE) Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offering investmentbanking services on privately issued securities is known as:A) The Glass-Steagall ActB) The Bank Merger ActC) The Depository Institutions Deregulation and Monetary Control ActD) The Federal Reserve ActE) None of the AboveAnswer: A51.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linkinggovernment supervision of the financial-services firm to the types of activities that the firmundertakes. For example the insurance portion of the firm would be regulated by state insurance commissions and the banking portion of the firm would be regulated by banking regulators. This approach to government supervision of financial services is known as:A) Consolidated regulation and supervision.B) Functional regulation.C) Services oversight.D) Umbrella supervision and regulation.E) None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure tobear on individuals and institutions to conform to the Fed's policies, using letters, phone calls, and speeches, is known as:A) Margin requirementsB) Moral suasionC) Discount window supervisionD) Conference and compromiseE) None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A) The Glass-Steagall ActB) The Federal Deposit Insurance Corporation Improvement ActC) The National Bank ActD) The Riegle-Neal Interstate Banking and Branching Efficiency Act.E) None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A) The National Banking Act.B) The McFadden-Pepper Act.C) The Glass Steagall Act.D) The Federal Reserve Act.E) None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the NationalBanking Act (1863)?A) Protection of the public's savingsB) Control of the money supplyC) Providing support for government activitiesD) Maintaining confidence in the banking systemE) Preventing banks from realizing monopoly powers21Answer: C56.Of the principal reasons for regulating banks, what was the primary purpose of the Federal ReserveAct of 1913?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to pay acompetitive interest rate is:A) The National Banking Act.B) The Glass Steagall Act.C) The Bank Merger Act.D) DIDMCAE) None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms toform financial services conglomerates isA) The National Banking ActB) The Glass Steagall ActC) The Garn St. Germain ActD) The Riegle Neal Interstate Banking ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E59.Of the principal reasons for regulating banks, what was the primary purpose of the Truth inLending Law?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A) What should be done about the regulatory safety net set up to protect small depositors?B) If financial institutions are allowed to take on more risk, how can taxpayers be protected frompaying the bill when more institutions fail?C) Does functional regulation actually work?D) Should regulators allow the mixing of banking and commerce?E) All of the above are unresolved issuesAnswer: E61.The law that made bank and nonbank depository institutions more alike in the services they couldoffer and allowed banks and thrifts to more fully compete with other financial institutions is:A) The National Banking ActB) The Federal Reserve ActC) The Garn-St. Germain ActD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions andconvert them to branches is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A) European UnionB) Bank of LondonC) Basle GroupD) European Central BankE) Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA) Financial Holding CompanyB) Bank Holding CompanyC) European Central BankD) Financial Service CorporationE) Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identities withgovernment agencies is:A) The Sarbanes-Oxley ActB) The U.S. Treasury Department ActC) The 9/11 ActD) The USA Patriot ActE) The Gramm-Leach-Bliley ActAnswer: D2366.The 1977 law that prevents banks from “redlining” ce rtain neighborhoods, refusing to serve thoseareas is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are basedon the riskiness of their assets is imposed by:A) The National Banking ActB) FIRREAC) The International Banking ActD) The Basel AgreementE) None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A) Financial statement misrepresentationB) Bank robberiesC) Individual privacy violationsD) Credit card fraudE) Identity theftAnswer: E69.The oldest federal bank agency is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: A70.The federal agency that regulates the most banks is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity of anycustomers opening new accounts?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: B72.Which federal banking act prohibits publishing false or misleading information about the financialperformance of a public company and requires top corporate officers to vouch for the accuracy of their company’s financial statements?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across the country?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74.Which federal banking act forces more individuals to repay at least part of what they owe and willpush higher-income borrowers into more costly forms of bankruptcy?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victims ofidentity theft to make theft reports and requires credit bureaus to help victims resolve theproblem?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D76.The _________ allows adequately capitalized bank holding companies to acquire banks in anystate.A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)Competitive Equality Banking Act25C)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary Control ActAnswer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by GeorgeStigler. He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks. Hecontends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all.George Benston contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: D80.The European Central Bank has the main goal of:A) Ensuring the economy grows at an adequate rate.B) Keeping unemployment low.C) Ensuring price stability.D) Ensuring an adequate and fair supply of loans.E) All of the aboveAnswer: C26Test Bank, Chapter 281.Which of the following has become the principal tool of central bank monetary policy today?A) Open market operationsB) Changing the discount rateC) Changing reserve requirementsD) Using moral suasionE) None of the aboveAnswer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A) Cause interest rates in the market to riseB) Cause interest rates in the market to fallC) Cause reserves held at the Federal Reserve to decreaseD) Cause a decrease in the growth of deposits and loansE) All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accountsfrom $100,000 to $250,000 and authorizes the FDIC to periodically increase deposit insurance coverage to keep up with inflation?A) Sarbanes-Oxley ActB) The Gramm-Leach-Bliley ActC) Check 21 ActD) The FACT ActE) Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A) Adds selected new service powers to depository institutionsB) Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’ legal reservesD) All of the aboveE) None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowedthe following:A) An emergency sale of “bad assets”B) Temporary increase of FDIC deposit insurance to $250,000 for all depositsC) Injections of capital by the government into banks and other qualified lendersD) Closer surveillance of the mortgage market participants, such as brokers and lendersE) All of the aboveAnswer: E27。

商业银行管理彼得S.罗斯英文原书第8版-英语试题库Chap007

Chapter 7Risk Management for Changing Interest Rates: Asset-Liability Management and Duration TechniquesFill in the Blank Questions1. The ___________________ view of assets and liabilities held that the amount andtypes of deposits was primarily determined by customers and hence the key decisiona bank needed to make was with the assets.Answer: asset management2. Recent decades have ushered in dramatic changes in banking. The goal of__________________ was simply to gain control of the bank's sources of funds.Answer: liability management3. The__________________________ is the interest rate that equalizes the currentmarket price of a bond with the present value of the future cash flows.Answer: yield to maturity (YTM)4. The __________________ risk premium on a bond allows the investor to be compensatedfor their projected loss in purchasing power from the increase in the prices of goods and services in the future.Answer: inflation5. The __________________ shows the relationship between the time to maturity and theyield to maturity of a bond. It is usually constructed using treasury securities since they are assumed to have no default risk.Answer: yield curve6. The __________________ risk premium on a bond reflects the differences in the easeand ability to sell the bond in the secondary market at a favorable price.Answer: liquidity7. __________________________ are those assets which mature or must be repriced withinthe planning period.Answer: Interest-sensitive assets8. __________________________ is the difference between interest-sensitive assets andinterest-sensitive liabilities.Answer: Dollar interest-sensitive gap9. A(n)__________________________ means that the bank has more interest-sensitiveliabilities than interest-sensitive assets.Answer: negative interest-sensitive gap (liability sensitive)10. The bank's__________________________ takes into account the idea that the speed(sensitivity) of interest rate changes will differ for different types of assets and liabilities.Answer: weighted interest-sensitive gap11. __________________________ is the coordinated management of both the bank's assetsand its liabilities.Answer: Funds management12. __________________________ is the risk due to changes in market interest rates whichcan adversely affect the bank's net interest margin, assets and equity.Answer: Interest rate risk13. The__________________________ is the rate of return on a financial instrument usinga 360 day year relative to the instrument's face value.Answer: bank discount rate14. The __________________________ component of interest rates is the risk premium dueto the probability that the borrower will miss some payments or will not repay the loan.Answer: default risk premium15. __________________ is the weighted average maturity for a stream of future cashflows. It is a direct measure of price risk.Answer: Duration16. __________________________ is the difference between the dollar-weighted durationof the asset portfolio and the dollar-weighted duration of the liability portfolio.Answer: Duration gap17. A(n)__________________________ duration gap means that for a parallel increase inall interest rates the market value of net worth will tend to decline.Answer: positive18. A(n)__________________________ duration gap means that for a parallel increasein all interest rates the market value of net worth will tend to increase.Answer: negative19. The __________________ refers to the periodic fluctuations in the scale of economicactivity.Answer: business cycle20. The__________________________ is equal to the duration of each individual type ofasset weighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the asset portfolio21. The__________________________ is equal to the duration of each individual type ofliability weighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the liability portfolio22. A bank is __________________ against changes in its net worth if its duration gapis equal to zero.Answer: immunized (insulated or protected)23. The relationship between a change in an asset's price and an asset’s change inthe yield or interest rate is captured by __________________________.Answer: convexity24. The change in a financial institution's __________________ is equal to differencein the duration of the assets and liabilities times the change in the interest rate divided by the starting interest rate times the dollar amount of the assets and liabilities.Answer: net worth25. When a bank has a positive duration gap a parallel increase in the interest rateson the assets and liabilities of the bank will lead to a(n) __________________ in the bank's net worth.Answer: decrease26. When a bank has a negative duration gap a parallel decrease in the interest rateson the assets and liabilities of the bank will lead to a(n)_________________________ in the bank's net worth.Answer: decrease27. U.S. banks tend to do better when the yield curve is upward-sloping because theytend to have ____________ maturity gap positions.Answer: positive28.One government-created giant mortgage banking firms which have subsequently beenprivatized is the .Answer: FNMA or Fannie Mae (or FHLMC or Freddie Mac)29.One part of interest rate risk is .This part of interest rate risk reflects that as interest rates rise, prices ofsecurities tend to fall.Answer: price risk30.One part of interest rate risk is .This part of interest rate risk reflects that as interest rates fall, any cash flowsthat are received before maturity are invested at a lower interest rate.Answer: reinvestment risk31.When a borrower has the right to pay off a loan early which reduced the lender’sexpected rate of return it is called .Answer: call risk32.In recent decades, banks have aggressively sought to insulate their assets andliability portfolios and profits from the ravages if interest rate changes. Manybanks now conduct their asset-liability management strategy with the help of an which often meets daily.Answer: asset-liability committee33. is interest income from loans andinvestments less interest expenses on deposits and borrowed funds divided by totalearning assets.Answer: Net interest margin (NIM)34. are those liabilities thatwhich mature or must be repriced within the planning period.Answer: Interest-sensitive liabilities35.Variable rate loans and securities are included as part offor banks.Answer: repriceable assets36.Money market deposits are included as part of forbanks.Answer: repriceable liabilities37.Interest sensitive assets less interest sensitive liabilities divided by totalassets of the bank is known as .Answer: relative interest sensitive gap38.Interest sensitive assets divided by interest sensitive liabilities is knownas .Answer: Interest sensitivity ratio39. is a measure of interest rateexposure which is the total difference in dollars between those assets andliabilities that can be repriced over a designated time period.Answer: Cumulative gap40. is the phenomenon that interest ratesattached to various assets often change by different amounts and at different speeds than interest rates attached to various liabilities,Answer: basis riskTrue/False QuestionsT F 41. Usually the principal goal of asset-liability management is to maximize or at least stabilize a bank's margin or spread.Answer: TrueT F 42. Asset management strategy in banking assumes that the amount and kinds of deposits and other borrowed funds a bank attracts are determined largely byits management.Answer: FalseT F 43. The ultimate goal of liability management is to gain control over a financial institution's sources of funds.Answer: TrueT F 44. If interest rates fall when a bank is in an asset-sensitive position its net interest margin will rise.Answer: FalseT F 45. A liability-sensitive bank will experience an increase in its net interest margin if interest rates rise.Answer: FalseT F 46. Under the so-called liability management view in banking the key control lever banks possess over the volume and mix of their liabilities is price.Answer: TrueT F 47. Under the so-called funds management view bank management's control over assets must be coordinated with its control over liabilities so that assetand liability management are internally consistent.Answer: TrueT F 48. Bankers cannot determine the level or trend of market interest rates; instead, they can only react to the level and trend of rates.Answer: TrueT F 49. Short-term interest rates tend to rise more slowly than long-term interest rates and to fall more slowly when all interest rates in the market are headeddown.Answer: FalseT F 50. A financial institution is liability sensitive if its interest-sensitive liabilities are less than its interest-sensitive assets.Answer: FalseT F 51. If a bank's interest-sensitive assets and liabilities are equal than its interest revenues from assets and funding costs from liabilities will changeat the same rate.Answer: TrueT F 52. Banks with a positive cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: TrueT F 53. Banks with a negative cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: FalseT F 54. For most banks interest rates paid on liabilities tend to move more slowly than interest rates earned on assets.Answer: FalseT F 55. Interest-sensitive gap techniques do not consider the impact of changing interest rates on stockholders equity.Answer: TrueT F 56. Interest-sensitive gap, relative interest-sensitive gap and the interest-sensitivity ratio will often reach different conclusions as towhether the bank is asset or liability sensitive.Answer: FalseT F 57. The yield curve is constructed using corporate bonds with different default risks so the bank can determine the risk/return tradeoff for default risk.Answer: FalseT F 58. Financial securities that are the same in all other ways may have differences in interest rates that reflect the differences in the ease of selling thesecurity in the secondary market at a favorable price.Answer: TrueT F 59. Financial institutions face two major kinds of interest rate risk. These risks include price risk and reinvestment risk.Answer: TrueT F 60. Interest-sensitive gap and weighted interest-sensitive gap will always reach the same conclusion as to whether a bank is asset sensitive or liabilitysensitive.Answer: FalseT F 61. Weighted interest-sensitive gap is less accurate than interest-sensitive gap in determining the affect of changes in interest rates on net interest margin.Answer: FalseT F 62. A bank with a positive duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: FalseT F 63. A bank with a negative duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: TrueT F 64. Duration is a direct measure of the reinvestment risk of a bond.Answer: FalseT F 65. A bank with a positive duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: TrueT F 66. A bank with a negative duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: FalseT F 67. Duration is the weighted average maturity of a promised stream of future cash flows.Answer: TrueT F 68. Duration is a direct measure of the price risk of a bond.Answer: TrueT F 69. A bond with a greater duration will have a smaller price change in percentage terms when interest rates change.Answer: FalseT F 70. Long-term interest rates tend to change very little with the cycle of economic activity.Answer: TrueT F 71. A bank with a duration gap of zero is immunized against changes in the value of net worth due to changes in interest rates in the market.Answer: TrueT F 72. Convexity is the idea that the rate of change of an asset's price varies with the level of interest rates.Answer: TrueT F 73. The change in the market price of an asset's price from a change in market interest rates is roughly equal to the asset's duration times the change theinterest rate divided by the original interest rate.Answer: TrueT F 74. U.S. banks tend to do better when the yield curve is upward-sloping.Answer: TrueT F 75. Net interest margin tends to rise for U.S. banks when the yield curve is upward-sloping.Answer: TrueT F 76. Financial institutions laden with home mortgages tend be immune to interest-rate risk.Answer: FalseT F 77. If a Financial Institution's net interest margin is immune to interest-rate risk then so is its net worth.Answer: FalseMultiple Choice Questions78.When is interest rate risk for a bank greatest?A)When interest rates are volatile.B)When interest rates are stable.C)When inflation is high.D)When inflation is low.E)When loan defaults are high.Answer: A79. A bank’s IS GAP is defined as:A)The dollar amount of rate-sensitive assets divided by the dollar amount ofrate-sensitive liabilities.B)The dollar amount of earning assets divided by the dollar amount of totalliabilities.C)The dollar amount of rate-sensitive assets minus the dollar amount ofrate-sensitive liabilities.D)The dollar amount of rate-sensitive liabilities minus the dollar amount ofrate-sensitive assets.E)The dollar amount of earning assets times the average liability interest rate.Answer: C80.According to the textbook, the maturing of the liability management techniques,coupled with more volatile interest rates, gave birth to the __________________ approach which dominates banking today. The term that correctly fills in the blank in the preceding sentence is:A) Liability managementB) Asset managementC) Risk managementD) Funds managementE) None of the above.Answer: D81.The principal goal of interest-rate hedging strategy is to hold fixed a bank's:A) Net interest marginB) Net income before taxesC) Value of loans and securitiesD) Noninterest spreadE) None of the above.Answer: A82. A bank is asset sensitive if its:A) Loans and securities are affected by changes in interest rates.B) Interest-sensitive assets exceed its interest-sensitive liabilities.C) Interest-sensitive liabilities exceed its interest-sensitive assets.D) Deposits and borrowings are affected by changes in interest rates.E) None of the above.Answer: B83.The change in a bank's net income that occurs due to changes in interest rates equalsthe overall change in market interest rates (in percentage points) times_____________. The choice below that correctly fills in the blank in the preceding sentence is:A) Volume of interest-sensitive assetsB) Price risk of the bank's assetsC) Price risk of the bank's liabilitiesD) Size of the bank's cumulative gapE) None of the above.Answer: D84. A bank with a negative interest-sensitive GAP:A) Has a greater dollar volume of interest-sensitive liabilities thaninterest-sensitive assets.B) Will generate a higher interest margin if interest rates rise.C) Will generate a higher interest margin if interest rates fall.D) A and B.E) A and C.Answer: E85.The net interest margin of a bank is influenced by:A) Changes in the level of interest rates.B) Changes in the volume of interest-bearing assets and interest-bearingliabilities.C) Changes in the mix of assets and liabilities in the bank's portfolio.D) All of the above.E) A and B only.Answer: D86.The discount rate that equalizes the current market value of a loan or securitywith the expected stream of future income payments from that loan or security is known as the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateAnswer: B87.The interest-rate measure often quoted on short-term loans and money marketsecurities such as U.S. Treasury bills is the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the aboveAnswer: A88. A bank whose interest-sensitive assets total $350 million and itsinterest-sensitive liabilities amount to $175 million has:A) An asset-sensitive gap of 525 millionB) A liability-sensitive gap of $175 millionC) An asset-sensitive gap of $175 millionD) A liability-sensitive gap of $350 millionE) None of the above.Answer: C89. A bank has a 1-year $1,000,000 loan outstanding, payable in four equal quarterlyinstallments. What dollar amount of the loan would be considered rate sensitive in the 0 – 90 day bucket?A)$0B)$250,000C)$500,000D)$750,000E)$1,000,000Answer: B90. A bank has Federal funds totaling $25 million with an interest rate sensitivityweight of 1.0. This bank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the weighted interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25Answer: A91. A bond has a face value of $1000 and five years to maturity. This bond has a couponrate of 13 percent and is selling in the market today for $902. Coupon payments are made annually on this bond. What is the yield to maturity (YTM) for this bond?A) 13%B) 12.75%C) 16%D) 11.45%E) Cannot be calculated from the information givenAnswer: C92. A treasury bill currently sells for $9,845, has a face value of $10,000 and has46 days to maturity. What is the bank discount rate on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: B93.The _______________ is determined by the demand and supply for loanable fundsin the market. The term that correctly fills in the blank in the preceding sentence is:A) The yield to maturityB) The banker's discount rateC) The holding period returnD) The risk-free real rate of interestE) The market rate of interest on a risky loanAnswer: D94. A bank with a positive interest-sensitive gap will have a decrease in net interestincome when interest rates in the market:A) RiseB) FallC) Stay the sameD) A bank with a positive interest-sensitive gap will never have a decrease in netinterest incomeAnswer: B95.The fact that a consumer who purchases a particular basket of goods for $100 todayhas to pay $105 next year for the same basket of goods is an example of which of the following risks:A) Inflation riskB) Default riskC) Liquidity riskD) Price riskE) Maturity riskAnswer: A96. A bank has Federal Funds totaling $25 million with an interest rate sensitivityweight of 1.0. This bank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the dollar interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25E) None of the aboveAnswer: B97.If a bank has a positive GAP, an increase in interest rates will cause interestincome to __________, interest expense to__________, and net interest income to __________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, increase, increaseAnswer: A98.If a bank has a negative GAP, a decrease in interest rates will cause interest incometo __________, interest expense to__________, and net interest income to__________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, decrease, increaseAnswer: E99. A treasury bill currently sells for $9,845, has a face value of $10,000 and has46 days to maturity. What is the yield to maturity on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: A100.The Third National Bank of Edmond reports a net interest margin of 5.83%. It has total interest revenues of $275 million and total interest expenses of $210 million.What does this bank's earnings assets have to be?A) $4717 millionB) $3602 millionC) $1115 millionD) $3.790 millionE) None of the aboveAnswer: C101.The Third National Bank of Edmond reports a net interest margin of 5.83%. It has total interest revenues of $275 million and total interest expenses of $210 million.This bank has earnings assets of $1115. Suppose this bank's interest revenues rise by 8 percent and its interest expenses and earnings assets rise by 10 percent next year. What is this bank's new net interest margin?A) 5.83%B) 7.09%C) 3.59%D) 5.38%E) 7.80%Answer: D102. Which of the following is part of funds management?A) The goal of funds management is simply to gain control over the bank's fundssources.B) Since the amount of deposits a bank holds is determined largely by its customers,the focus of the bank should be on managing the assets of the bank.C) Management of the bank's assets must be coordinated with management of the bank'sliabilities.D) The spread between interest revenues and interest expenses is unimportant.E) None of the aboveAnswer: C103. If Fifth National Bank's asset duration exceeds its liability duration and interest rates rise, this will tend to __________________ the market value of the bank's net worth.A) LowerB) RaiseC) StabilizeD) Not affectE) None of the aboveAnswer: A104.If Main Street Bank has $100 million in commercial loans with an average duration of 0.40 years; $40 million in consumer loans with an average duration of 1.75 years;and $30 million in U.S. Treasury bonds with an average duration of 6 years, what is Main Street's asset portfolio duration?A) 0.4 yearsB) 1.7 yearsC) 2.7 yearsD) 4.1 yearsE) None of the aboveAnswer: B105. A bank has an average asset duration of 4.7 years and an average liability duration of 3.3 years. This bank has $750 million in total assets and $500 million in total liabilities. This bank has:A) A positive duration gap of 8.0 years.B) A negative duration gap of 2.5 years.C) A positive duration gap of 1.4 years.D) A positive duration gap of 2.5 years.E) None of the above.Answer: D106. A bank has an average asset duration of 1.15 years and an average liability duration of 2.70 years. This bank has $250 million in total assets and $225 million in total liabilities. This bank has:A) A negative duration gap of 1.55 years.B) A positive duration gap of 1.28 years.C) A negative duration gap of 3.85 years.D) A negative duration gap of 1.28 years.E) None of the above.Answer: D107.The duration of a bond is the weighted average maturity of the future cash flows expected to be received on a bond. Which of the following is a true statement concerning duration?A) The longer the time to maturity, the greater the durationB) The higher the coupon rate, the higher the durationC) The shorter the duration, the greater the price volatilityD) All of the above are trueE) None of the above are trueAnswer: A108. A bond has a duration of 7.5 years. Its current market price is $1125. Interest rates in the market are 7% today. It has been forecasted that interest rates will rise to 9% over the next couple of weeks. How will this bank's price change in percentage terms?A) This bond's price will rise by 2 percent.B) This bond's price will fall by 2 percent.C) This bond's price will fall by 14 .02 percentD) This bond's price will rise by 14.02 percentE) This bond's price will not changeAnswer: C109. A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to 8 percent), what is this bank's change in net worth?A) Net worth will decrease by $31.81 millionB) Net worth will increase by $31.81 millionC) Net worth will increase by $27.27 millionD) Net worth will decrease by $27.27 millionE) Net worth will not change at allAnswer: B110. A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to 8 percent), what is this bank's duration gap?A) 2 yearsB) –2 yearsC) 3.5 yearsD) –3.5 yearsE) None of the aboveAnswer: C111. A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, market interest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank's change in net worth?A) Net worth will decrease by $50.47 millionB) Net worth will increase by $50.47 millionC) Net worth will decrease by $240.95 millionD) Net worth will increase by $240.95 millionE) Net worth will not change at allAnswer: B112. A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, market interest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank's duration gap?A) –4 yearsB) 4 yearsC) 2.65 yearsD) –2.65 yearsE) 12.65 yearsAnswer: D113. A bank has $100 million of investment grade bonds with a duration of 9.0 years.This bank also has $500 million of commercial loans with a duration of 5.0 years.This bank has $300 million of consumer loans with a duration of 2.0 years. This bank has deposits of $600 million with a duration of 1.0 years and nondeposit borrowings of $100 million with an average duration of .25 years. What is this bank's duration gap? These are all of the assets and liabilities this bank has.A) This bank has a duration gap of 14.75 yearsB) This bank has a duration gap of 15.03 yearsC) This bank has a duration gap of 3.55 yearsD) This bank has a duration gap of 3.75 yearsE) This bank has a duration gap of 5.15 yearsAnswer: D。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap007

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap007Chapter 7Risk Management for Changing Interest Rates: Asset-Liability Management and Duration TechniquesFill in the Blank Questions1. The ___________________ view of assets and liabilities held that the amount and types of depositswas primarily determined by customers and hence the key decision a bank needed to make waswith the assets.Answer: asset management2. Recent decades have ushered in dramatic changes in banking. The goal of __________________was simply to gain control of the bank's sources of funds.Answer: liability management3. The__________________________ is the interest rate that equalizes the current market price of abond with the present value of the future cash flows.Answer: yield to maturity (YTM)4. The __________________ risk premium on a bond allows the investor to be compensated for theirprojected loss in purchasing power from the increase in the prices of goods and services in thefuture.Answer: inflation5. The __________________ shows the relationship between the time to maturity and the yield tomaturity of a bond. It is usually constructed using treasurysecurities since they are assumed tohave no default risk.Answer: yield curve6. The __________________ risk premium on a bond reflects the differences in the ease and ability tosell the bond in the secondary market at a favorable price.Answer: liquidity7. __________________________ are those assets which mature or must be repriced within theplanning period.Answer: Interest-sensitive assets8. __________________________ is the difference between interest-sensitive assets andinterest-sensitive liabilities.Answer: Dollar interest-sensitive gap9. A(n)__________________________ means that the bank has more interest-sensitive liabilitiesthan interest-sensitive assets.Answer: negative interest-sensitive gap (liability sensitive)10. The bank's__________________________ takes into account the idea that the speed (sensitivity)of interest rate changes will differ for different types of assets and liabilities.Answer: weighted interest-sensitive gap11. __________________________ is the coordinated management of both the bank's assets and itsliabilities.Answer: Funds management12. __________________________ is the risk due to changes in market interest rates which canadversely affect the bank's net interest margin, assets and equity.Answer: Interest rate risk13. The__________________________ is the rate of return on a financial instrument using a 360 dayyear relative to the instrument's face value.Answer: bank discount rate14. The __________________________ component of interest rates is the risk premium due to theprobability that the borrower will miss some payments or will not repay the loan.Answer: default risk premium15. __________________ is the weighted average maturity for a stream of future cash flows. It is adirect measure of price risk.Answer: Duration16. __________________________ is the difference between the dollar-weighted duration of the assetportfolio and the dollar-weighted duration of the liability portfolio.Answer: Duration gap17. A(n)__________________________ duration gap means that fora parallel increase in all interestrates the market value of net worth will tend to decline.Answer: positive18. A(n)__________________________ duration gap means that fora parallel increase in all interestrates the market value of net worth will tend to increase.Answer: negative19. The __________________ refers to the periodic fluctuationsin the scale of economic activity.Answer: business cycle20. The__________________________ is equal to the duration of each individual type of assetweighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the asset portfolio21. The__________________________ is equal to the duration of each individual type of liabilityweighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the liability portfolio22. A bank is __________________ against changes in its net worth if its duration gap is equal to zero.Answer: immunized (insulated or protected)23. The relationship between a change in an asset's price and an asset’s change in the yield or interestrate is captured by __________________________.Answer: convexity24. The change in a financial institution's __________________ is equal to difference in the durationof the assets and liabilities times the change in the interest rate divided by the starting interest rate times the dollar amount of the assets and liabilities.Answer: net worth25. When a bank has a positive duration gap a parallel increase in the interest rates on the assets andliabilities of the bank will lead to a(n) __________________ in the bank's net worth.Answer: decrease26. When a bank has a negative duration gap a parallel decrease in the interest rates on the assets andliabilities of the bank will lead to a(n)_________________________ in the bank's net worth.Answer: decrease27. U.S. banks tend to do better when the yield curve is upward-sloping because they tend to have____________ maturity gap positions.Answer: positive28.One government-created giant mortgage banking firms which have subsequently been privatized isthe .Answer: FNMA or Fannie Mae (or FHLMC or Freddie Mac)29.One part of interest rate risk is . This part of interest rate risk reflectsthat as interest rates rise, prices of securities tend to fall.Answer: price risk30.One part of interest rate risk is . This part of interest rate risk reflectsthat as interest rates fall, any cash flows that are received before maturity are invested at a lower interest rate.Answer: reinvestment risk31.When a borrower has the right to pay off a loan early which reduced the lender’s expected rate ofreturn it is called .Answer: call risk32.In recent decades, banks have aggressively sought to insulate their assets and liability portfoliosand profits from the ravages if interest rate changes. Many banks now conduct their asset-liability management strategywith the help of an which often meets daily.Answer: asset-liability committee33. is interest income from loans and investments less interest expenses ondeposits and borrowed funds divided by total earning assets.Answer: Net interest margin (NIM)34. are those liabilities that which mature or must be repriced withinthe planning period.Answer: Interest-sensitive liabilities35.Variable rate loans and securities are included as part of for banks.Answer: repriceable assets36.Money market deposits are included as part of for banks.Answer: repriceable liabilities37.Interest sensitive assets less interest sensitive liabilities divided by total assets of the bank is knownas .Answer: relative interest sensitive gap38.Interest sensitive assets divided by interest sensitive liabilities is known as .Answer: Interest sensitivity ratio39. is a measure of interest rate exposure which is the total difference indollars between those assets and liabilities that can be repriced over a designated time period.Answer: Cumulative gap40. is the phenomenon that interest rates attached to various assets oftenchange by different amounts and at different speeds thaninterest rates attached to variousliabilities,Answer: basis riskTrue/False QuestionsT F 41. Usually the principal goal of asset-liability management is to maximize or at least stabilizea bank's margin or spread.Answer: TrueT F 42. Asset management strategy in banking assumes that the amount and kinds of deposits and other borrowed funds a bank attracts are determined largely by its management.Answer: FalseT F 43. The ultimate goal of liability management is to gain control over a financial institution's sources of funds.Answer: TrueT F 44. If interest rates fall when a bank is in an asset-sensitive position its net interest margin will rise.Answer: FalseT F 45. A liability-sensitive bank will experience an increase in its net interest margin if interest rates rise.Answer: FalseT F 46. Under the so-called liability management view in banking the key control lever banks possess over the volume and mix of their liabilities is price.Answer: TrueT F 47. Under the so-called funds management view bank management's control over assets must be coordinated with its control over liabilities so that asset and liability management are internally consistent.Answer: TrueT F 48. Bankers cannot determine the level or trend of market interest rates; instead, they can only react to the level and trend of rates.Answer: TrueT F 49. Short-term interest rates tend to rise more slowly than long-term interest rates and to fall more slowly when all interest rates in the market are headed down.Answer: FalseT F 50. A financial institution is liability sensitive if its interest-sensitive liabilities are less than its interest-sensitive assets.Answer: FalseT F 51. If a bank's interest-sensitive assets and liabilities are equal than its interest revenues from assets and funding costs from liabilities will change at the same rate.Answer: TrueT F 52. Banks with a positive cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: TrueT F 53. Banks with a negative cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: FalseT F 54. For most banks interest rates paid on liabilities tend to move more slowly than interest rates earned on assets.Answer: FalseT F 55. Interest-sensitive gap techniques do not consider the impact of changing interest rates on stockholders equity.Answer: TrueT F 56. Interest-sensitive gap, relative interest-sensitive gapand the interest-sensitivity ratio will often reach different conclusions as to whether the bank is asset or liability sensitive.Answer: FalseT F 57. The yield curve is constructed using corporate bonds with different default risks so the bank can determine the risk/return tradeoff for default risk.Answer: FalseT F 58. Financial securities that are the same in all other ways may have differences in interest rates that reflect the differences in the ease of selling the security in the secondary market ata favorable price.Answer: TrueT F 59. Financial institutions face two major kinds of interest rate risk. These risks include price risk and reinvestment risk.Answer: TrueT F 60. Interest-sensitive gap and weighted interest-sensitive gap will always reach the same conclusion as to whether a bank is asset sensitive or liability sensitive.Answer: FalseT F 61. Weighted interest-sensitive gap is less accurate than interest-sensitive gap in determining the affect of changes in interest rates on net interest margin.Answer: FalseT F 62. A bank with a positive duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: FalseT F 63. A bank with a negative duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: TrueT F 64. Duration is a direct measure of the reinvestment riskof a bond.Answer: FalseT F 65. A bank with a positive duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: TrueT F 66. A bank with a negative duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: FalseT F 67. Duration is the weighted average maturity of a promised stream of future cash flows.Answer: TrueT F 68. Duration is a direct measure of the price risk of a bond.Answer: TrueT F 69. A bond with a greater duration will have a smaller price change in percentage terms when interest rates change.Answer: FalseT F 70. Long-term interest rates tend to change very little with the cycle of economic activity.Answer: TrueT F 71. A bank with a duration gap of zero is immunized against changes in the value of net worth due to changes in interest rates in the market.Answer: TrueT F 72. Convexity is the idea that the rate of change of an asset's price varies with the level of interest rates.Answer: TrueT F 73. The change in the market price of an asset's price from a change in market interest rates is roughly equal to the asset'sduration times the change the interest rate divided by the original interest rate.Answer: TrueT F 74. U.S. banks tend to do better when the yield curve is upward-sloping.Answer: TrueT F 75. Net interest margin tends to rise for U.S. banks when the yield curve is upward-sloping.Answer: TrueT F 76. Financial institutions laden with home mortgages tend be immune to interest-rate risk.Answer: FalseT F 77. If a Financial Institution's net interest margin is immune to interest-rate risk then so is its net worth.Answer: FalseMultiple Choice Questions78.When is interest rate risk for a bank greatest?A)When interest rates are volatile.B)When interest rates are stable.C)When inflation is high.D)When inflation is low.E)When loan defaults are high.Answer: A79. A bank’s IS GAP is defined as:A)The dollar amount of rate-sensitive assets divided by the dollar amount of rate-sensitiveliabilities.B)The dollar amount of earning assets divided by the dollar amount of total liabilities.C)The dollar amount of rate-sensitive assets minus the dollaramount of rate-sensitive liabilities.D)The dollar amount of rate-sensitive liabilities minus the dollar amount of rate-sensitive assets.E)The dollar amount of earning assets times the average liability interest rate.Answer: C80.According to the textbook, the maturing of the liability management techniques, coupled with morevolatile interest rates, gave birth to the __________________ approach which dominates banking today. The term that correctly fills in the blank in the preceding sentence is:A) Liability managementB) Asset managementC) Risk managementD) Funds managementE) None of the above.Answer: D81.The principal goal of interest-rate hedging strategy is to hold fixed a bank's:A) Net interest marginB) Net income before taxesC) Value of loans and securitiesD) Noninterest spreadE) None of the above.Answer: A82. A bank is asset sensitive if its:A) Loans and securities are affected by changes in interest rates.B) Interest-sensitive assets exceed its interest-sensitive liabilities.C) Interest-sensitive liabilities exceed its interest-sensitive assets.D) Deposits and borrowings are affected by changes in interest rates.E) None of the above.Answer: B83.The change in a bank's net income that occurs due to changes in interest rates equals the overallchange in market interest rates (in percentage points) times _____________. The choice below that correctly fills in the blank in the preceding sentence is:A) Volume of interest-sensitive assetsB) Price risk of the bank's assetsC) Price risk of the bank's liabilitiesD) Size of the bank's cumulative gapE) None of the above.Answer: D84. A bank with a negative interest-sensitive GAP:A) Has a greater dollar volume of interest-sensitive liabilities than interest-sensitive assets.B) Will generate a higher interest margin if interest rates rise.C) Will generate a higher interest margin if interest rates fall.D) A and B.E) A and C.Answer: E85.The net interest margin of a bank is influenced by:A) Changes in the level of interest rates.B) Changes in the volume of interest-bearing assets and interest-bearing liabilities.C) Changes in the mix of assets and liabilities in the bank'sportfolio.D) All of the above.E) A and B only.Answer: D86.The discount rate that equalizes the current market value of a loan or security with the expectedstream of future income payments from that loan or security is known as the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the above.Answer: B87.The interest-rate measure often quoted on short-term loans and money market securities such asU.S. Treasury bills is the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the aboveAnswer: A88. A bank whose interest-sensitive assets total $350 million and its interest-sensitive liabilitiesamount to $175 million has:A) An asset-sensitive gap of 525 millionB) A liability-sensitive gap of $175 millionC) An asset-sensitive gap of $175 millionD) A liability-sensitive gap of $350 millionE) None of the above.Answer: C89. A bank has a 1-year $1,000,000 loan outstanding, payable in four equal quarterly installments.What dollar amount of the loan would be considered rate sensitive in the 0 – 90 day bucket?A)$0B)$250,000C)$500,000D)$750,000E)$1,000,000Answer: B90. A bank has Federal funds totaling $25 million with an interest rate sensitivity weight of 1.0. Thisbank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the weighted interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25E) None of the aboveAnswer: A91. A bond has a face value of $1000 and five years to maturity. This bond has a coupon rate of 13percent and is selling in the market today for $902. Couponpayments are made annually on this bond. What is the yield to maturity (YTM) for this bond?A) 13%B) 12.75%C) 16%D) 11.45%E) Cannot be calculated from the information givenAnswer: C92. A treasury bill currently sells for $9,845, has a face value of $10,000 and has 46 days to maturity.What is the bank discount rate on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: B93.The _______________ is determined by the demand and supply for loanable funds in the market.The term that correctly fills in the blank in the preceding sentence is:A) The yield to maturityB) The banker's discount rateC) The holding period returnD) The risk-free real rate of interestE) The market rate of interest on a risky loanAnswer: D94. A bank with a positive interest-sensitive gap will have a decrease in net interest income wheninterest rates in the market:A) RiseB) FallC) Stay the sameD) A bank with a positive interest-sensitive gap will never have a decrease in net interest incomeAnswer: B95.The fact that a consumer who purchases a particular basket of goods for $100 today has to pay $105next year for the same basket of goods is an example of which of the following risks:A) Inflation riskB) Default riskC) Liquidity riskD) Price riskE) Maturity riskAnswer: A96. A bank has Federal Funds totaling $25 million with an interest rate sensitivity weight of 1.0. Thisbank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the dollar interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25E) None of the aboveAnswer: B97.If a bank has a positive GAP, an increase in interest rates will cause interest income to __________,interest expense to__________, and net interest income to __________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, increase, increaseAnswer: A98.If a bank has a negative GAP, a decrease in interest rates will cause interest income to __________,interest expense to__________, and net interest income to __________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, decrease, increaseAnswer: E99. A treasury bill currently sells for $9,845, has a face value of $10,000 and has 46 days to maturity.What is the yield to maturity on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: A100.The Third National Bank of Edmond reports a net interest margin of 5.83%. It has total interest revenues of $275 million and total interest expenses of $210 million. What does this bank'searnings assets have to be?A) $4717 millionB) $3602 millionC) $1115 millionD) $3.790 millionE) None of the aboveAnswer: C101.The Third National Bank of Edmond reports a net interest margin of 5.83%. It has total interest revenues of $275 million and total interest expenses of $210 million. This bank has earnings assets of $1115. Suppose this bank's interest revenues rise by 8 percent and its interest expenses and earnings assets rise by 10 percent next year. What is this bank's new net interest margin?A) 5.83%B) 7.09%C) 3.59%D) 5.38%E) 7.80%Answer: D102. Which of the following is part of funds management?A) The goal of funds management is simply to gain control over the bank's funds sources.B) Since the amount of deposits a bank holds is determined largely by its customers, the focus ofthe bank should be on managing the assets of the bank.C) Management of the bank's assets must be coordinated with management of the bank'sliabilities.D) The spread between interest revenues and interest expenses is unimportant.E) None of the aboveAnswer: C103. If Fifth National Bank's asset duration exceeds its liability duration and interest rates rise, this will tend to __________________ the market value of the bank's net worth.A) LowerB) RaiseC) StabilizeD) Not affectE) None of the aboveAnswer: A104.If Main Street Bank has $100 million in commercial loans with an average duration of 0.40 years;$40 million in consumer loans with an average duration of 1.75 years; and $30 million in U.S.Treasury bonds with an average duration of 6 years, what is Main Street's asset portfolio duration?A) 0.4 yearsB) 1.7 yearsC) 2.7 yearsD) 4.1 yearsE) None of the aboveAnswer: B105.A bank has an average asset duration of 4.7 years and an average liability duration of 3.3 years.This bank has $750 million in total assets and $500 million in total liabilities. This bank has:A) A positive duration gap of 8.0 years.B) A negative duration gap of 2.5 years.C) A positive duration gap of 1.4 years.D) A positive duration gap of 2.5 years.E) None of the above.Answer: D106.A bank has an average asset duration of 1.15 years and an average liability duration of 2.70 years.This bank has $250 million in total assets and $225 million in total liabilities. This bank has:A) A negative duration gap of 1.55 years.B) A positive duration gap of 1.28 years.C) A negative duration gap of 3.85 years.D) A negative duration gap of 1.28 years.E) None of the above.Answer: D107.The duration of a bond is the weighted average maturity of the future cash flows expected to be received on a bond. Which of the following is a true statement concerning duration?A) The longer the time to maturity, the greater the durationB) The higher the coupon rate, the higher the durationC) The shorter the duration, the greater the price volatilityD) All of the above are trueE) None of the above are trueAnswer: A108.A bond has a duration of 7.5 years. Its current market price is $1125. Interest rates in the market are 7% today. It has been forecasted that interest rates will rise to 9% over the nextcouple of weeks.How will this bank's price change in percentage terms?A) This bond's price will rise by 2 percent.B) This bond's price will fall by 2 percent.C) This bond's price will fall by 14 .02 percentD) This bond's price will rise by 14.02 percentE) This bond's price will not changeAnswer: C109.A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to8 percent), what is this bank's change in net worth?A) Net worth will decrease by $31.81 millionB) Net worth will increase by $31.81 millionC) Net worth will increase by $27.27 millionD) Net worth will decrease by $27.27 millionE) Net worth will not change at allAnswer: B110.A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to8 percent), what is this bank's duration gap?A) 2 yearsB) –2 yearsC) 3.5 yearsD) –3.5 yearsE) None of the aboveAnswer: C111.A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, marketinterest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank'schange in net worth?A) Net worth will decrease by $50.47 millionB) Net worth will increase by $50.47 millionC) Net worth will decrease by $240.95 millionD) Net worth will increase by $240.95 millionE) Net worth will not change at allAnswer: B112.A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, marketinterest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank'sduration gap?A) –4 yearsB) 4 yearsC) 2.65 yearsD) –2.65 yearsE) 12.65 yearsAnswer: D113.A bank has $100 million of investment grade bonds with a duration of 9.0 years. This bank also has $500 million of commercial loans with a duration of 5.0 years. This bank has $300 million ofconsumer loans with a duration of 2.0 years. This bank has deposits of $600 million with a duration of 1.0 years and nondeposit borrowings of $100 million with an average duration of .25 years.What is this bank's duration gap? These are all of the assets and liabilities this bank has.A) This bank has a duration gap of 14.75 yearsB) This bank has a duration gap of 15.03 yearsC) This bank has a duration gap of 3.55 yearsD) This bank has a duration gap of 3.75 yearsE) This bank has a duration gap of 5.15 yearsAnswer: D114. Which of the following statements is true concerning a bank's duration gap?A) If a bank has a positive duration gap and interest rates rise, the bank's net worth will declineB) A bank with a positive duration gap has a longer average duration for its assets than for itsliabilitiesC) If a bank has a zero duration gap and interest rates rise, the bank's net worth will not changeD) If a bank has a negative duration gap and interest rates rise, the bank's net worth will increaseE) All of the above are true statementsAnswer: E115. A bank has an average duration for its asset portfolio of 5.5 years. This bank has total assets of $1000 million and total liabilities of $750 million. If this bank has a zero duration gap, what must the duration of its liabilities portfolio be?A) 7.33 years。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap009

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap009Chapter 9Risk Management: Asset-Backed Securities, Loan Sales, Credit Standbys, and Credit DerivativesFill in the Blank Questions1. When a bank sets aside a group of income-earning assets and then sells securities based upon thoseassets it is ________________________ those assets.Answer: securitizing2. Often when loans are securitized they are passed on to a _________________________ who poolsthe loans and sells securities.Answer: special purpose entity3. A(n) _________________________ allows a homeowner to borrow against the residual value oftheir residence.Answer: home equity loan4. _________________________ allow the bank to generate fee income after they have sold a loan.The bank continues to collect interest and principal from the borrowers and passes these collections to the loan buyers.Answer: Servicing rights5. In a _________________________ an outsider purchases part ofa loan from the selling financialinstitution. Generally the purchaser has no influence over the terms of the loan contract.Answer: participation loan6. A(n) _________________________ is a contingent claim of thebank that issues it. The issuingbank, in return for a fee, guarantees the repayment of a loan received by its customer or thefulfillment of a contract made by its customer to a third party.Answer: standby credit agreement7. A(n) _________________________ occurs when two banks agree to exchange a portion or all ofthe loan repayments of their customers.Answer: credit swap8. A(n) __________________ guards against the losses in the value of a credit asset. It would pay offif the asset declines significantly in value or if it completely turns bad.Answer: credit option.9. A(n) _________________________ combines a normal debt instrument with a credit option. Itallows the issuer of the debt instrument to lower its loan repayments if some significant factor changes.Answer: credit linked note10. The _________________________ of a standby letter of credit is a bank or other investor who isconcerned about the safety of funds committed to the recipient of the standby letter of credit.Answer: beneficiary11. A(n) _________________________ guarantees the swap partiesa specific rate of return on theircredit asset. Bank A may agree to pay the total return on the loan to Bank B plus any appreciation in the market value of the loan. In return Bank A will often get LIBOR plus a fixed spread plus any depreciation in the value of the loan.Answer: total return swap12. The ________________________ is the party that is requestinga standby letter of credit.Answer: account party13. The __________________ is the bank or financial institution which guarantees the payment of theloan in a standby letter of credit.Answer: issuer14. A(n) _________________________ is a loan sale where ownership of the loan is transferred to thebuyer of the loan, who then has a direct claim against the borrower.Answer: assignment15. Another type of loan sale is a(n) _________________________ which is a short dated piece of alonger maturity loan, entitling the purchaser to a fraction of the expected loan income.Answer: loan strip16. A relatively new type of credit derivative is a CDO which stands for __________________.Answer: collateralized debt obligation17. Insurance companies are a prime __________ of credit derivatives.Answer: seller18.A(n) is an over-the-counter agreement offering protection against losswhen default occurs on a loan or other debt instrument.Answer: credit derivative19.A(n) is related to the credit option and is usually aimed at lenders ableto handle comparatively limited declines in value but wants insurance against serious losses.Answer: credit default swap20.There has been an explosion in in recent years. These instruments rest onpools of credit derivatives that mainly insure against defaults on corporate bonds. The creators of these instruments do not have to buy and pool actual bonds but can create these instruments and generate revenues from selling and trading in them.Answer: synthetic CDOs (Collateralized debt obligations)21. A rates the securities to be sold from a pool of securitized loans sothat investors have a better idea of what the new securities are likely to be worth.Answer: credit rating agency22.A(n) is an assurance that investors will be repaid in the event of thedefault of the underlying loans in a securitization. These can be internal or external to thesecuritization process and lower the risk of the securities.Answer: credit enhancement23.When the FHLMC creates CMOs they often use different which eachpromise a different coupon rate and which have different maturity and risk characteristics.24.Lenders can set aside a group of loans on their balance sheet, issue bonds and pledge the loans ascollateral against the bonds in . These usually stay on the bank’s balance sheet as liabilities.25.FNMA (Fannie Mae) and FHLMC (Freddie Mac) are examples of . Theyappear to have the unofficial backing of the federal government in the event of default.Answer: government sponsored enterprises (GSEs)True/False QuestionsT F 26. Securitization is designed to turn illiquid loans into liquid assets in the form of securities sold in the open market.Answer: TrueT F 27. Securitization has the added advantage of generating fee income for banks.Answer: TrueT F 28. Securitized assets cannot be removed from a bank's balance sheet until they mature.Answer: FalseT F 29. Securitization raises the level of competition for the best-quality loans among banks.Answer: TrueT F 30. Servicing rights on loans sold consist of the collection of interest and principal payments from borrowers and monitoring borrower compliance with loan terms.Answer: TrueT F 31. A loan sold by a bank to another investor with recourse means the bank has given the investor a call option on the loan.Answer: FalseT F 32. An account party will seek a bank's standby credit guarantee if the bank's fee for issuing the guarantee is less than the value assigned the guarantee by its beneficiary.Answer: TrueT F 33. Securitization tends to lengthen the maturity of a bank's assets.Answer: FalseT F 34. Securitized assets as a source of bank funds are subject to reserve requirements set by the Federal Reserve Board.Answer: FalseT F 35. Securitizations of commercial loans usually carry the same regulatory capital requirements for a bank as the original loans themselves.Answer: TrueT F 36. Most loans that banks sell off their balance sheets have minimum denominations of at leasta million dollars.Answer: TrueT F 37. Most loans that banks sell off their balance sheets carry interest rates that usually are connected to long-term interest rates (such as the 30-year Treasury bond rate).Answer: FalseT F 38. In a participation loan the purchaser is an outsider to the loan contract between the financial institution selling the loan and the borrower.Answer: TrueT F 39. The buyer of a loan participation must watch both the borrower and the seller bank closely.Answer: TrueT F 40. Under an assignment ownership of a loan is transferred to the buyer, though the buyer still holds only an indirect claim against the borrower.Answer: FalseT F 41. Loan sales are generally viewed as risk-reducing forthe selling financial institution.Answer: TrueT F 42. In a CMO, the different tiers (or tranches) of security purchasers face the same prepayment risk.Answer: FalseT F 43. A standby letter of credit substantially reduces the issuing bank's interest rate risk and liquidity risk.Answer: FalseT F 44. Securitization of loans can easily be applied to business loans since these loans tend to have similar cash flow schedules and comparable risk structures.Answer: FalseT F 45. The advantage of a credit swap is that it allows each bank in the swap to broaden its market area and spread out its credit risk on its loans.Answer: TrueT F 46. Bank use of credit derivatives is dominated by the largest banks.Answer: TrueT F 47. The credit derivatives market has grown nine-fold during the recent years.Answer: TrueT F 48. Banks are the principal sellers of credit derivatives.Answer: FalseT F 49. Banks are one of the principal buyers of credit derivatives.Answer: TrueT F 50. Insurance companies are one of the principal sellers of credit derivatives.Answer: TrueMultiple Choice Questions51. Securitized assets carry a unique form of risk called:A) Default riskB) Inflation riskC) Interest-rate riskD) Prepayment riskE) None of the aboveAnswer: D52. Short-dated pieces of a longer-term loan, usually maturing in a few days or weeks, are called:A) Loan participationsB) Servicing rightsC) Loan stripsD) Shared creditsE) None of the aboveAnswer: C53. The party for whom a standby credit letter is issued by a bank is known as the:A) Account partyB) BeneficiaryC) RepresentativeD) Credit GuarantorE) None of the aboveAnswer: A54. When a bank issues a standby credit guarantee on behalf of one of its customers, the party receivingthe guarantee is known as the:A) Account partyB) BeneficiaryC) ObligatorD) Servicing agentE) None of the aboveAnswer: B55. Securitization had its origin in the selling of securities backed by _____________A) Credit card receivablesB) Residential mortgage loansC) Computer leasesD) Automobile loansE) Truck leasesAnswer: B56. Loan-backed securities, which closely resemble traditional bonds, carry various forms of creditenhancements, which may include all of the following, EXCEPT:A) Credit letter guaranteeing repayment of the securities.B) Set aside of a cash reserve.C) Division into different risk classes.D) Early payment clauses.E) None of the above.Answer: D57. In some instances, a bank will sell loans and agree to give the loan purchaser recourse to the sellerfor all or a portion of those loans that become delinquent. In this case, the purchaser, in effect, gets a:A) Call option.B) Put option.C) Forward contract.D) Futures contractE) None of the above.Answer: B58. The key advantages of issuing standby letters of credit include which of the following:A) Letters of credit generate fee income for the bank.B) Letters of credit typically reduce the borrower's cost of borrowing.C) Letters of credit can usually be issued for a relatively low cost.D) The probability is low that the issuer of the letter of credit will be called upon to pay.E) All of the above.Answer: E59. Banks that issue standby letters of credit may face which of the following types of risk?A) Prepayment risk.B) Interest-rate risk.C) Liquidity risk.D) All of the above.E) B and C only.Answer: E59.By agreeing to service any assets that are packaged together in the securitization process a bankcan:A) Ensure the assets that are packaged and securitized remain in the package and are not sold off.B) Choose the best loans to go through the securitization process.C) Earn added fee income.D) Liquidate any assets it chooses.E) None of the above.Answer: C60. The difference in interest rates between securitized loans themselves and the securities issuedagainst the loans is referred to as:A) The funding gapB) Residual income.C) Service returnsD) Security incomeE) None of the aboveAnswer: B61. If a credit letter is issued to backstop payments on loan-backed securities, the credit letter is a formof:A) Collateralized assetB) Residual incomeC) Direct loan obligationD) Credit enhancementE) None of the aboveAnswer: D62. Loan sales by banks are generally of two types: (a) participation loans; and (b)__________. Theterm that correctly fills in the blank above is:A) AssignmentsB) Recourse loansC) Direct loansD) Subscription loansE) None of the above.Answer: A63. A standby credit letter is a (or an):A) Securitized stripB) Loan stripC) Contingent obligationD) Indirect loanE) None of the above.Answer: C64. A bank that wants to protect itself from higher credit costs due to a decrease in its credit ratingmight purchase _________________________ .A) A credit risk optionB) A standby letter of creditC) A credit linked noteD) A credit swapE) None of the aboveAnswer: A65. When two banks simply agree to exchange a portion of their customers' loan repayments, they areusing:A) A credit optionB) A standby letter of creditC) A credit linked noteD) A credit swapE) None of the aboveAnswer: D66. A debt instrument which allows the issuer to lower its coupon payments if some significant factorchanges is called:A) A credit optionB) A standby letter of creditC) A credit linked noteD) A credit swapE) None of the aboveAnswer: C67. Which of the following is a risk of using credit derivatives?A) Credit derivatives do not protect against credit risk exposureB) The partner in the swap or option contract may fail to performC) Regulators may decide to lower the amount of capital needed for banks using these derivativesD) Regulators may decide that these derivatives make the bank more stable and efficientE) All of the above are risks of using credit derivativesAnswer: B68. A securitized asset where the asset used to back the securities is a loan based on the residual valueof a homeowner's residence is called:A) A mortgage backed securityB) A credit card backed securityC) An automobile backed securityD) A loan backed bondE) A home equity loan backed securityAnswer: E69. A financial institution plans to issue a group of bonds backed by a pool of automobile loans.However, they fear that the default rate on the automobile loans will rise well above 4 percent of the portfolio –the projected default rate. The financial institution wants to lower the interest payments if the loan default rate rises too high. Which type of credit derivative contract would you most recommend for this situation?A) Credit linked noteB) Credit optionC) Credit risk optionD) Total return swapE) Credit swapAnswer: A70. A bank is about to make a $50 million project loan to develop a new oil field and is worried that thepetroleum engineer's estimates of the yield on the field are incorrect. The bank wants to protect itself in case the developer cannot repay the loan. Which type of credit derivative contract would you most recommend for this situation?A) Credit linked noteB) Credit optionC) Credit risk optionD) Total return swapE) Credit swapAnswer: B71. A bank plans to offer new subordinated notes in the open market next month but knows that itscredit rating is being reviewed by a credit rating agency. The bank wants to avoid paying sharply higher credit costs. Which type of credit derivative contract would you most recommend for this situation?A) Credit linked noteB) Credit optionC) Credit risk optionD) Total return swapE) Credit swapAnswer: C72. A bank is concerned about excess volatility in its cash flows from some recent business loans it hasmade. Many of these loans have a fixed rate of interest and the bank's economics department has forecast a sharp increase in interest rates. The bank wants more stable cash flows. Which type of credit derivative contract would you most recommend for this situation?A) Credit linked noteB) Credit optionC) Credit risk optionD) Total return swapE) Credit swapAnswer: D73. A bank has a limited geographic area. It would like to diversify its loan income with loans in othermarket areas but does not want to actually make loans in those areas because of their limitedexperience in those areas. Which type of credit derivative contract would you most recommend for this situation?A) Credit linked noteB) Credit optionC) Credit risk optionD) Total return swapE) Credit swapAnswer: E74. A bank has a long term relationship with a particular business customer. However, recently thebank has become concerned because of a potential deterioration in the customer's income. In addition, regulators have expressed concerns about the bank's capital position. Thebusinesscustomer has asked for a renewal of its $25 million dollar loan with the bank. Which creditderivative can help this situation?A) Credit swapB) Loan saleC) Loan securitizationD) Credit risk optionE) Credit linked notesAnswer: B75. A bank has placed 5000 consumer loans in a package to be securitized. These loans have an annualyield of 15.25 percent. This bank estimates that the securities on these loans are priced to yield10.95 percent. The bank expects 1.45 percent of the loans will default. Underwriting and advisoryservices will cost .25 percent and a credit guarantee if more loans default than expected willcost .35 percent. What is the residual income from this loan securitization?A) 3.70 percentB) 4.30 percentC) 2.25 percentD) 5.15 percentE) None of the aboveAnswer: C76. Bank use of credit derivatives is dominated byA) Community BanksB) The largest (over $1 billion) banksC) The retail banksD) None of the banksE) Banks do not use credit derivatives yetAnswer: B77. According to the text, in 2005 the securitization of loans reached:A) Million dollar marketB) Billion dollar marketC) Trillion dollar marketD) Market unknown in valueE) Small but growing marketAnswer: C78. The principal sellers of credit derivatives include all of the following except:A) Insurance companiesB) Securities dealersC) Fund management firmsD) BanksE) None of the aboveAnswer: D79.The bank or other lender whose loans are pooled is called:A) The originatorB) The special purpose entityC) The trusteeD) The servicerE) The credit enhancerAnswer: A80.Loans that are to be securitized pass to . This helps ensure that if the lender goesbankrupt it does not affect the credit status of the pooled loans.A) The originatorB) The special purpose entityC) The trusteeD) The servicerE) The credit enhancerAnswer: B81.Someone appointed to ensure that the issuer fulfills all the requirements of the transfer of the loansto the pool and provides all of the services promised to investors in the securities is called:A) The originatorB) The special purpose entityC) The trusteeD) The servicerE) The credit enhancerAnswer: C82.Someone who collects the payments on the securitized loans and passes those payments on to thetrustee is called:A) The originatorB) The special purpose entityC) The trusteeD) The servicerE) The credit enhancerAnswer: D83.Investors in securitized loans normally receive added assurance that they will be repaid in the formof guarantees against default issued by:A) The originatorB) The special purpose entityC) The trusteeD) The servicerE) The credit enhancerAnswer: E84.When an issuer of securitized loans divides them into different risk classes or tranches, they areproviding an:A) Internal credit enhancementB) External credit enhancementC) Internal liquidity enhancementD) External liquidity enhancementE) None of the aboveAnswer: A85.When an issuer of securitized loans includes a standby letter of credit with the securitized loans,they are providing an:A) Internal credit enhancementB) External credit enhancementC) Internal liquidity enhancementD) External liquidity enhancementE) None of the aboveAnswer: B86.When an issuer of securitized loans sets aside a cash reserve to cover loan defaults, they areproviding an:A) Internal credit enhancementB) External credit enhancementC) Internal liquidity enhancementD) External liquidity enhancementE) None of the aboveAnswer: A87.Which of the following is an advantage of securitizing loans?A) D iversifying a lender’s credit risk exposureB) Reducing the ne ed to monitor each ind ividual loan’s payment streamC) Transforming illiquid assets into liquid securitiesD) Serving as a new source of funds for lenders and attractive investments for investorsE) All of the above are advantages of securitizing loansAnswer: E88.Why are securitized loans often issued through a special purpose entity?A) Because the securitized loans often add risk to the bank and need to be held separatelyB) Because the securitized loans are not profitable for the bank and need to be held separatelyC) Because the special purpose entity might fail and this prevents the failure of the bankD) Because the bank might fail and this protects the credit status of the securitized loansE) All of the aboveAnswer: D89. A group of pooled loans used is expected to yield a return of 23%. The coupon rate promised toinvestors on securities issued against the pool of loans is 8%. The default rate on the pooled loans is expected to be 4.5%. The fee to compensate a servicing institution for collecting payments on the loans is 2%. Fees to set up credit and liquidity enhancements are 3%. The fee for providing advising how to setup the pool of securitized loans is 1%. What is the residual income on this pool of loans?A) 18.5%B) 9%C) 4.5%D) 2%E) None of the aboveAnswer: C90.The coupon rate promised investors on securities issued against a pool of loans is 6.5%. Thedefault rate on the pool of loans is expected to be 3.5%. The fee to compensate a servicinginstitution for collecting payments on the loan is 2%. Fees to set up credit and liquidityenhancements are 5%. The residual income on this pool of loans is 7%. What is the expected yield on this pool of loans?A) 24%B) 12%C) 10%D) 6.5%E) None of the aboveAnswer: A91.In a collateralized mortgage obligation (CMO) a tranche:A) Promises a different return (coupon) to investorsB) A liquidity enhancementC) Carries a different risk exposureD) A and C aboveE) All of the aboveAnswer: D92.What is one of the advantages of using loan-backedbonds?A) Loans used as collateral for the bonds can be sold before the maturity of the bondsB) Loan-backed bonds have longer maturities than depositsC) Banks do not have to meet regulatory capital requirements on loans used as collateralD) Banks can use less loans as collateral than the amount of bonds issuedE) All of the above are advantages of loan-backed bondsAnswer: B93.What is one of the disadvantages of using loan backed bonds?A) The cost of funding often risesB) There is greater default risk on the bondsC) Loans used as collateral for the bonds must be held until the bonds reach maturityD) Loan backed bonds have shorter maturities than depositsE) All of the above are disadvantages of loan-backed bondsAnswer: C94.According to the textbook, what is the minimum size of the loan-backed securities offering that arelikely to be successful?A) $1 millionB) $10 millionC) $25 millionD) $50 millionE) $1 trillionAnswer: D95.Which of the following is a concern regulators have about securitization?A) The risk of being an underwriter for asset-backed securities that cannot be soldB) The risk of acting as a credit enhancer and underestimating the need for loan-loss reservesC) The risk that unqualified trustees will fail to protect investors in asset-backed instrumentsD) The risk that loan servicers will be unable to satisfactorily monitor loan performanceE) All of the above are concerns regulators have about securitizationAnswer: E96.What prompted a surge in loan sales in the 1980s?A) A wave of corporate buyoutsB) An increase in lesser developed country loansC) A loosening of government regulationsD) An increase in international lendingE) None of the aboveAnswer: A97.Why have the use of standby credit letters grown in recent years?A) The growth of bank loans sought by companies in recent yearsB) The decreased demand for risk reduction devicesC) The high cost of standby credit letters in recent yearsD) The rapid growth of direct financing by companiesE) All of the aboveAnswer: D98. Which of the following is true regarding regulatory rules for standby credit letters issued by banks?A) They must list the standby credit letter as a liability ontheir balance sheetB) They must count standbys as loansC) They do not have to apply the same credit standards for approving standbys as direct loansD) They can apply lower capital standards to standbys than loansAnswer: B99.Which of the following is true regarding regulatory rules for standby credit letters issued by banks?A) They must list the standby credit letter as a liability on their balance sheetB) They do not have to list standby credit letters when assessing the risk exposure to a single creditcustomerC) They must apply the same credit standards for approving standby credit letters as direct loansD) They can apply lower capital standards to standby credit letters than loansE) None of the above is trueAnswer: C100.Regular collateralized debt obligations (CDO) have been surpassed by:A) Credit swapsB) Credit optionsC) Credit default swapsD) Total return swapsE) Synthetic collateralized debt obligationsAnswer: E101.According to research, off-balance-sheet standby credit letters reduce risk by:A) Increasing diversification of assetsB) Reducing the need for documentationC) Reducing probability of lossesD) Avoiding capital requirementsE) Increasing concentration of risk exposureAnswer: A102.What is the advantage of credit swaps for each partner?A) Broaden the number of marketsB) Broaden the variety of markets from which they collect loan revenues and principalC) Spread out the risk in the loan portfolioD) Avoiding capital requirementsE) A, B, and CAnswer: E103.What are the ways to reduce the risk of standby credit letters?A) Avoid renegotiating the terms of loans of SLC customersB) Specialize in SLCs issued by the same region and industryC) Sell participations in standbys in order to share risk with other lending institutionsD) Do not count standbys as loans when assessing the bank’s risk exposureE) All of the above are the ways to reduce the riskAnswer: C104.The lesson(s) of the credit crisis of 2007-2009 is that the “bankruptcy remote” arrangement of the special-purpose entity (SPE):A) Reduces the need for securitizationB) Eliminates the probability of bankruptcy of the originator institutionC) May create problems if the underlying loans go bad in great numbersD) Eliminates the need for a trusteeE) All of the above are correctAnswer: C105.The lesson from the credit crisis of 2007-2009 is that securitized assets and credit swaps are:A) Complex financial instrumentsB) Difficult to correctly value and measure in terms of risk exposureC) Affected by cyclically sensitive markets in which financial problems may spread and result in afinancial contagionD) Possible to set in motion a financial contagion that cannot be easily stopped without activegovernment interventionE) All of the above are correctAnswer: E。

(完整版)商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap002

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1.The _____________________ was created as part of the Glass Steagall Act. In the beginningit insured deposits up to $2,500.Answer: FDIC2.The________________________ is the law that states that a bank must get approved from theirregulatory body in order to combine with another bank.Answer: Bank Merger Act3.One tool that the Federal Reserve uses to control the money supply is _________________ .The Federal Reserve will buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4.The__________________________ was created in 1913 in response to a series of economicdepressions and failures. Its principal role is to serve as the lender of last resort and to stabilizethe financial markets.Answer: Federal Reserve5.The __________________________ prevented banks from crossing state lines and made nationalbanks subject to the branching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6.Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problemcalled the ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7.In 1980, __________________________ was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.Answer: DIDMCA8.One tool that the Federal Reserve uses to control the money supply is _________________.The Federal Reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9.The first major federal banking law in the U.S. was the __________________________. Thislaw was passed during the Civil War and set up a system for chartering national banks andcreated the OCC.Answer: National Banking Act10.The_________________________ was passed during the Great Depression. It separatedinvestment and commercial banks and created the FDIC.Answer: Glass-Steagall Act11.The__________________________ brought bank holding companies under the jurisdiction ofthe Federal Reserve.Answer: Bank Holding Company Act12.The__________________________ allows bank holding companies to acquire banks anywherein the United States. However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13.The allows banks to affiliate with insurance companies andsecurities firms either through a holding company or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14.Customers of financial-service companies may _____________________ of having their privateinformation shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personalinformation shared with outside parties.Answer: opt out15.The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16.The _________________ requires financial service companies to report suspicious activity incustomer accounts to the Treasury Department.Answer: U.S. Patriot Act17.The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18.The _____________________ Act prohibits banks and other publicly owned firms frompublishing false or misleading financial performance information.Answer: Sarbanes-Oxley19.One of the main roles of the Federal Reserve today is . They have three toolsthat they use today to carry out this role; open market operations, the discount rate and legalreserve requirements.Answer: monetary policy20.The is the center of authority and decision making within theFederal Reserve. It consists of seven members appointed by the president for terms notexceeding 14 years.Answer: Board of Governors21.The main regulators of insurance companies are .Answer: state insurance commissions22.Federal Credit Unions are regulated and examined by .Answer: the National Credit Union Administration.23.The makes it easier for victims of identity theft to file fraudalerts and allows the public to apply for a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24.The makes it faster and less costly for banks to clear checks.It allows for banks to electronically send check images instead of shipping paper checks across the country.Answer: Check 21 Act25.The was created by the National Banking Act and is part ofthe Treasury Department. It is the primary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financialmarkets to combat the recent credit crisis. This “bail-out” bill granted the US Treasury the means to purchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.Answer: The Emergency Economic Stabilization Act of 2008True/False QuestionsT F27.Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: FalseT F28.In the United States, fixed fees charged for deposit insurance, regardless of how risky a bank is, led to a problem known as moral hazard.Answer: TrueT ernment-sponsored deposit insurance typically encourages individual depositors to monitor their banks' behavior in accepting risk.Answer: FalseT F29.The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F30.The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F31.National banks cannot merge without the prior approval of the Comptroller of the Currency.Answer: TrueT F32.The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F33.The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as theCompetitive Equality in Banking Act.Answer: FalseT F34.Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Boardapproval.Answer: TrueT F35.The 1994 federal interstate banking bill does not limit the percentage of statewide or nationwide deposits that an interstate banking firm is allowed to control.Answer: FalseT F36.The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central governmentand local governments regulate banks.Answer: FalseT F37.The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk.Answer: TrueT F38.When the Federal Reserve buys T-bills through its open market operations, it causes the growth of bank deposits and loans to decrease.Answer: FalseT F39.When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F40.The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F41.FIRREA (1989) allowed bank holding companies to acquire nonblank depository institutions and, if desired, convert them into branch offices.Answer: TrueT F42.The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F43.The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F44.Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F45.The tool used by the Federal Reserve System to influence the economy and behavior of banks is known as moral hazard.Answer: FalseT F46.One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A)Banks are leading repositories of the public's savings.B)Banks have the power to create money.C)Banks provide businesses and individuals with loans that support consumption andinvestment spending.D)Banks assist governments in conducting economic policy, collecting taxes and dispensinggovernment payments.E)All of the above.Answer: E48.An institutional arrangement in which federal and state authorities both have significant bankregulatory powers is referred to as:A)Balance of PowerB)FederalismC)Dual Banking SystemD)Cooperative RegulationE)Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A)National Bank ActB)McFadden-Pepper ActC)Glass-Steagall ActD)Bank Merger ActE)Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offering investmentbanking services on privately issued securities is known as:A)The Glass-Steagall ActB)The Bank Merger ActC)The Depository Institutions Deregulation and Monetary Control ActD)The Federal Reserve ActE)None of the AboveAnswer: A51.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linkinggovernment supervision of the financial-services firm to the types of activities that the firmundertakes. For example the insurance portion of the firm would be regulated by stateinsurance commissions and the banking portion of the firm would be regulated by bankingregulators. This approach to government supervision of financial services is known as:A)Consolidated regulation and supervision.B)Functional regulation.C)Services oversight.D)Umbrella supervision and regulation.E)None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure tobear on individuals and institutions to conform to the Fed's policies, using letters, phone calls, and speeches, is known as:A)Margin requirementsB)Moral suasionC)Discount window supervisionD)Conference and compromiseE)None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A)The Glass-Steagall ActB)The Federal Deposit Insurance Corporation Improvement ActC)The National Bank ActD)The Riegle-Neal Interstate Banking and Branching Efficiency Act.E)None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A)The National Banking Act.B)The McFadden-Pepper Act.C)The Glass Steagall Act.D)The Federal Reserve Act.E)None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the NationalBanking Act (1863)?A)Protection of the public's savingsB)Control of the money supplyC)Providing support for government activitiesD)Maintaining confidence in the banking systemE)Preventing banks from realizing monopoly powersAnswer: C56.Of the principal reasons for regulating banks, what was the primary purpose of the FederalReserve Act of 1913?A)Protection of the public's savingsB)Control of the money supplyC)Preventing banks from realizing monopoly powersD)Ensuring an adequate and fair supply of loansE)None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to pay acompetitive interest rate is:A)The National Banking Act.B)The Glass Steagall Act.C)The Bank Merger Act.D)DIDMCAE)None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms toform financial services conglomerates isA)The National Banking ActB)The Glass Steagall ActC)The Garn St. Germain ActD)The Riegle Neal Interstate Banking ActE)The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E59.Of the principal reasons for regulating banks, what was the primary purpose of the Truth inLending Law?A)Protection of the public's savingsB)Control of the money supplyC)Preventing banks from realizing monopoly powersD)Ensuring an adequate and fair supply of loansE)None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A) What should be done about the regulatory safety net set up to protect small depositors?B)If financial institutions are allowed to take on more risk, how can taxpayers be protected frompaying the bill when more institutions fail?C)Does functional regulation actually work?D)Should regulators allow the mixing of banking and commerce?E)All of the above are unresolved issuesAnswer: E61.The law that made bank and nonbank depository institutions more alike in the services they couldoffer and allowed banks and thrifts to more fully compete with other financial institutions is:A)The National Banking ActB)The Federal Reserve ActC)The Garn-St. Germain ActD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions andconvert them to branches is:A)The National Banking ActB)The Garn-St. Germain ActC)FIRREAD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A)European UnionB)Bank of LondonC)Basle GroupD)European Central BankE)Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA)Financial Holding CompanyB)Bank Holding CompanyC)European Central BankD)Financial Service CorporationE)Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identities withgovernment agencies is:A)The Sarbanes-Oxley ActB)The U.S. Treasury Department ActC)The 9/11 ActD)The USA Patriot ActE)The Gramm-Leach-Bliley ActAnswer: D66.The 1977 law that prevents banks from “redlining” certain neighborhoods, refusing to serve thoseareas is:A)The National Banking ActB)The Garn-St. Germain ActC)FIRREAD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are basedon the riskiness of their assets is imposed by:A)The National Banking ActB)FIRREAC)The International Banking ActD)The Basel AgreementE)None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A)Financial statement misrepresentationB)Bank robberiesC)Individual privacy violationsD)Credit card fraudE)Identity theftAnswer: E69.The oldest federal bank agency is the:A)OCCB)FDICC)FRSD)FHCE)BHCAnswer: A70.The federal agency that regulates the most banks is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity of anycustomers opening new accounts?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: B72.Which federal banking act prohibits publishing false or misleading information about thefinancial performance of a public company and requires top corporate officers to vouch for the accuracy of their company’s financial statements?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across thecountry?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74.Which federal banking act forces more individuals to repay at least part of what they owe andwill push higher-income borrowers into more costly forms of bankruptcy?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victims ofidentity theft to make theft reports and requires credit bureaus to help victims resolve theproblem?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D2576.The _________ allows adequately capitalized bank holding companies to acquire banks in anystate.A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)Competitive Equality Banking ActC)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary Control ActAnswer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by GeorgeStigler. He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks.He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all.George Benston contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: D80.The European Central Bank has the main goal of:A) Ensuring the economy grows at an adequate rate.B) Keeping unemployment low.Test Bank, Chapter 2 26C) Ensuring price stability.D) Ensuring an adequate and fair supply of loans.E) All of the aboveAnswer: C81.Which of the following has become the principal tool of central bank monetary policy today?A) Open market operationsB) Changing the discount rateC) Changing reserve requirementsD) Using moral suasionE) None of the aboveAnswer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A) Cause interest rates in the market to riseB) Cause interest rates in the market to fallC) Cause reserves held at the Federal Reserve to decreaseD) Cause a decrease in the growth of deposits and loansE) All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accountsfrom $100,000 to $250,000 and authorizes the FDIC to periodically increase deposit insurance coverage to keep up with inflation?A) Sarbanes-Oxley ActB) The Gramm-Leach-Bliley ActC) Check 21 ActD) The FACT ActE) Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A) Adds selected new service powers to depository institutionsB) Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’ legal reservesD) All of the aboveE) None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowedthe following:A) An emergency sale of “bad assets”B) Temporary increase of FDIC deposit insurance to $250,000 for all depositsC) Injections of capital by the government into banks and other qualified lendersD) Closer surveillance of the mortgage market participants, such as brokers and lendersE) All of the aboveAnswer: E27。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap002(最新整理)

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1.The _____________________ was created as part of the Glass Steagall Act. In the beginning itinsured deposits up to $2,500.Answer: FDIC2.The________________________ is the law that states that a bank must get approved from theirregulatory body in order to combine with another bank.Answer: Bank Merger Act3.One tool that the Federal Reserve uses to control the money supply is _________________ .The Federal Reserve will buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4.The__________________________ was created in 1913 in response to a series of economicdepressions and failures. Its principal role is to serve as the lender of last resort and to stabilize the financial markets.Answer: Federal Reserve5.The __________________________ prevented banks from crossing state lines and made nationalbanks subject to the branching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6.Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem calledthe ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7.In 1980, __________________________ was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.Answer: DIDMCA8.One tool that the Federal Reserve uses to control the money supply is _________________. TheFederal Reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9.The first major federal banking law in the U.S. was the __________________________. This lawwas passed during the Civil War and set up a system for chartering national banks and created the OCC.Answer: National Banking Act10.The_________________________ was passed during the Great Depression. It separatedinvestment and commercial banks and created the FDIC.Answer: Glass-Steagall Act11.The__________________________ brought bank holding companies under the jurisdiction of theFederal Reserve.Answer: Bank Holding Company Act12.The__________________________ allows bank holding companies to acquire banks anywhere inthe United States. However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13.The allows banks to affiliate with insurance companies andsecurities firms either through a holding company or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14.Customers of financial-service companies may _____________________ of having their privateinformation shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties.Answer: opt out15.The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16.The _________________ requires financial service companies to report suspicious activity incustomer accounts to the Treasury Department.Answer: U.S. Patriot Act17.The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18.The _____________________ Act prohibits banks and other publicly owned firms frompublishing false or misleading financial performance information.Answer: Sarbanes-Oxley19.One of the main roles of the Federal Reserve today is . They have three toolsthat they use today to carry out this role; open market operations, the discount rate and legal reserve requirements.Answer: monetary policy20.The is the center of authority and decision making within theFederal Reserve. It consists of seven members appointed by the president for terms not exceeding14 years.Answer: Board of Governors21.The main regulators of insurance companies are .Answer: state insurance commissions22.Federal Credit Unions are regulated and examined by .Answer: the National Credit Union Administration.23.The makes it easier for victims of identity theft to file fraud alertsand allows the public to apply for a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24.The makes it faster and less costly for banks to clear checks. Itallows for banks to electronically send check images instead of shipping paper checks across the country.Answer: Check 21 Act25.The was created by the National Banking Act and is part of theTreasury Department. It is the primary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financial marketsto combat the recent credit crisis. This “bail-out” bill granted the US Treasury the means topurchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.Answer: The Emergency Economic Stabilization Act of 2008True/False QuestionsT F27.Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: FalseT F28.In the United States, fixed fees charged for deposit insurance, regardless of how risky a bank is, led to a problem known as moral hazard.Answer: TrueT ernment-sponsored deposit insurance typically encourages individual depositors to monitor their banks' behavior in accepting risk.Answer: FalseT F29.The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F30.The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F31.National banks cannot merge without the prior approval of the Comptroller of the Currency.Answer: TrueT F32.The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F33.The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as the CompetitiveEquality in Banking Act.Answer: FalseT F34.Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Boardapproval.Answer: TrueT F35.The 1994 federal interstate banking bill does not limit the percentage of statewide ornationwide deposits that an interstate banking firm is allowed to control.Answer: FalseT F36.The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central governmentand local governments regulate banks.Answer: FalseT F37.The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk.Answer: TrueT F38.When the Federal Reserve buys T-bills through its open market operations, it causes the growth of bank deposits and loans to decrease.Answer: FalseT F39.When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F40.The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F41.FIRREA (1989) allowed bank holding companies to acquire nonblank depository institutions and, if desired, convert them into branch offices.Answer: TrueT F42.The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F43.The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F44.Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F45.The tool used by the Federal Reserve System to influence the economy and behavior of banks is known as moral hazard.Answer: FalseT F46.One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A)Banks are leading repositories of the public's savings.B)Banks have the power to create money.C)Banks provide businesses and individuals with loans that support consumption and investmentspending.D)Banks assist governments in conducting economic policy, collecting taxes and dispensinggovernment payments.E)All of the above.Answer: E48.An institutional arrangement in which federal and state authorities both have significant bankregulatory powers is referred to as:A)Balance of PowerB)FederalismC)Dual Banking SystemD)Cooperative RegulationE)Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A)National Bank ActB)McFadden-Pepper ActC)Glass-Steagall ActD)Bank Merger ActE)Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offering investmentbanking services on privately issued securities is known as:A)The Glass-Steagall ActB)The Bank Merger ActC)The Depository Institutions Deregulation and Monetary Control ActD)The Federal Reserve ActE)None of the AboveAnswer: A51.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linkinggovernment supervision of the financial-services firm to the types of activities that the firmundertakes. For example the insurance portion of the firm would be regulated by state insurance commissions and the banking portion of the firm would be regulated by banking regulators.This approach to government supervision of financial services is known as:A)Consolidated regulation and supervision.B)Functional regulation.C)Services oversight.D)Umbrella supervision and regulation.E)None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure tobear on individuals and institutions to conform to the Fed's policies, using letters, phone calls, and speeches, is known as:A)Margin requirementsB)Moral suasionC)Discount window supervisionD)Conference and compromiseE)None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A)The Glass-Steagall ActB)The Federal Deposit Insurance Corporation Improvement ActC)The National Bank ActD)The Riegle-Neal Interstate Banking and Branching Efficiency Act.E)None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A)The National Banking Act.B)The McFadden-Pepper Act.C)The Glass Steagall Act.D)The Federal Reserve Act.E)None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the NationalBanking Act (1863)?A)Protection of the public's savingsB)Control of the money supplyC)Providing support for government activitiesD)Maintaining confidence in the banking systemE)Preventing banks from realizing monopoly powersAnswer: C56.Of the principal reasons for regulating banks, what was the primary purpose of the Federal ReserveAct of 1913?A)Protection of the public's savingsB)Control of the money supplyC)Preventing banks from realizing monopoly powersD)Ensuring an adequate and fair supply of loansE)None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to pay acompetitive interest rate is:A)The National Banking Act.B)The Glass Steagall Act.C)The Bank Merger Act.D)DIDMCAE)None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms toform financial services conglomerates isA)The National Banking ActB)The Glass Steagall ActC)The Garn St. Germain ActD)The Riegle Neal Interstate Banking ActE)The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E59.Of the principal reasons for regulating banks, what was the primary purpose of the Truth inLending Law?A)Protection of the public's savingsB)Control of the money supplyC)Preventing banks from realizing monopoly powersD)Ensuring an adequate and fair supply of loansE)None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A) What should be done about the regulatory safety net set up to protect small depositors?B)If financial institutions are allowed to take on more risk, how can taxpayers be protected frompaying the bill when more institutions fail?C)Does functional regulation actually work?D)Should regulators allow the mixing of banking and commerce?E)All of the above are unresolved issuesAnswer: E61.The law that made bank and nonbank depository institutions more alike in the services they couldoffer and allowed banks and thrifts to more fully compete with other financial institutions is:A)The National Banking ActB)The Federal Reserve ActC)The Garn-St. Germain ActD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions andconvert them to branches is:A)The National Banking ActB)The Garn-St. Germain ActC)FIRREAD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A)European UnionB)Bank of LondonC)Basle GroupD)European Central BankE)Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA)Financial Holding CompanyB)Bank Holding CompanyC)European Central BankD)Financial Service CorporationE)Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identities withgovernment agencies is:A)The Sarbanes-Oxley ActB)The U.S. Treasury Department ActC)The 9/11 ActD)The USA Patriot ActE)The Gramm-Leach-Bliley ActAnswer: D66.The 1977 law that prevents banks from “redlining” certain neighborhoods, refusing to serve thoseareas is:A)The National Banking ActB)The Garn-St. Germain ActC)FIRREAD)The Riegle-Neal Interstate Banking and Branching Efficiency ActE)Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are basedon the riskiness of their assets is imposed by:A)The National Banking ActB)FIRREAC)The International Banking ActD)The Basel AgreementE)None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A)Financial statement misrepresentationB)Bank robberiesC)Individual privacy violationsD)Credit card fraudE)Identity theftAnswer: E69.The oldest federal bank agency is the:A)OCCB)FDICC)FRSD)FHCE)BHCAnswer: A70.The federal agency that regulates the most banks is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity of anycustomers opening new accounts?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: B72.Which federal banking act prohibits publishing false or misleading information about the financialperformance of a public company and requires top corporate officers to vouch for the accuracy of their company’s financial statements?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across the country?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74.Which federal banking act forces more individuals to repay at least part of what they owe and willpush higher-income borrowers into more costly forms of bankruptcy?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victims ofidentity theft to make theft reports and requires credit bureaus to help victims resolve theproblem?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D76.The _________ allows adequately capitalized bank holding companies to acquire banks in anystate.A)Riegle-Neal Interstate Banking and Branching Efficiency Act25B)Competitive Equality Banking ActC)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary Control ActAnswer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by GeorgeStigler. He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks. Hecontends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all.George Benston contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: D80.The European Central Bank has the main goal of:A) Ensuring the economy grows at an adequate rate.B) Keeping unemployment low.C) Ensuring price stability.D) Ensuring an adequate and fair supply of loans.E) All of the aboveTest Bank, Chapter 2 26Answer: C81.Which of the following has become the principal tool of central bank monetary policy today?A) Open market operationsB) Changing the discount rateC) Changing reserve requirementsD) Using moral suasionE) None of the aboveAnswer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A) Cause interest rates in the market to riseB) Cause interest rates in the market to fallC) Cause reserves held at the Federal Reserve to decreaseD) Cause a decrease in the growth of deposits and loansE) All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accountsfrom $100,000 to $250,000 and authorizes the FDIC to periodically increase deposit insurance coverage to keep up with inflation?A) Sarbanes-Oxley ActB) The Gramm-Leach-Bliley ActC) Check 21 ActD) The FACT ActE) Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A) Adds selected new service powers to depository institutionsB) Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’ legal reservesD) All of the aboveE) None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowedthe following:A) An emergency sale of “bad assets”B) Temporary increase of FDIC deposit insurance to $250,000 for all depositsC) Injections of capital by the government into banks and other qualified lendersD) Closer surveillance of the mortgage market participants, such as brokers and lendersE) All of the aboveAnswer: E27。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap006

Chapter 6Measuring and Evaluating the Performance of Banks and Their Principal CompetitorsFill in the Blank Questions1. The equity multiplier for a bank measures the amount of_____________________ of the bank and is one part of the evaluation of the bank's ROE.Answer: leverage (debt)2. __________________________ is the risk that has to do withthe quality of the bank's assets and, in particular, the bank's loans.Answer: Credit risk3. Solvency (or capital) risk for a bank can be measuredby__________________________. List one way solvency risk can be measured.Answer: Purchased Funds/Total Liabilities (There are several otherratios that can answer this question as well)4. __________________________ are the assets of a financialinstitution that will mature or be repriced within a set period of time.Answer: Interest Sensitive Assets5. __________________________ is the risk that the value of thefinancial institution's asset portfolio (particularly government or othermarketable securities) will decline in value.Answer: Market risk6. Eurodollars, Fed Funds, Repurchase Agreements, and large CDstogether are know as _____________________.Answer: Purchased Funds7. __________________________ is the risk that the financial institution may not be able to meet the needs of depositors for cash. Answer: Liquidity risk8. __________________________ are loans which are past due by 90 days or more.Answer: Nonperforming loans9. __________________________ reflects the bank's portfoliomanagement policies and the mix and yield on the bank's securities and is one part of the evaluation of ROE.Answer: Asset utilization10. __________________________ reflects the effectiveness of theexpense management of the bank and is one part of the evaluation ofROE.Answer: Net profit margin11. __________________________ measures the return tostockholders on their investment in the bank. It is the product of netprofit margin, asset utilization and the equity multiplier.Answer: ROE12. __________________________ measures the amount of debt orleverage a bank has and is one part of the evaluation of the bank'sROE) It is generally a number larger than one.Answer: Equity multiplier13. The__________________________ is a standardized reportprovided by federal regulators which reports the balance sheet, income statement and other data for all federally supervised banks. It has thisyear's data as well as three previous years and also contains information on peer institutions.Answer: Uniform Bank Performance Report14. __________________________ measures the bank's risk oflong run survival. It measures the bank's capital position and shows if there has been any erosion of capital over time.Answer: Solvency risk (or capital risk)15. __________________________ is the risk that shifting interestrates in the market will adversely affect a financial institution's net income or the value of its assets or equity.Answer: Interest rate risk16. The ____________________ Act restricts combined auditing and consulting relationships in order to promote auditor independence and objectivity.Answer: Sarbanes-Oxley17. is one of the most widelyrespected private institutions that rates the credit quality offinancial institutions.Answer: Thomson’s BankWatch, Inc.18. refers to the uncertaintyregarding the financial firm’s earnings due to failures in computer systems, errors, misconduct by employees, lightening strikes and similar events.Answer: Operational (transactional) risk19. refers to variability inearnings resulting from actions taken by the legal system including unenforceable contracts, lawsuits and adverse judgements. Answer: Legal risk20. includes violations of rulesand regulations. It can include failure to hold adequate capitalwhich can lead to costly corrective actions.Answer: Compliance risk21. is the uncertainty associated withpublic opinion. Negative publicity (whether true or not) can affecta financial firm’s earnings by dissuading customers from using theservices of the institution.Answer: Reputation risk22. As data processing of financial information becomes moreimportant, managers of financial firms can realize cost savingsfrom , transferring tasks from insideto firm itself to other firms specializing in information technology. Answer: outsourcing23. A traditional measure of earnings efficiency is theor total interest income over total earnings assets less total interestexpenses over total interest bearing bank liabilities. It measuresthe effectiveness of a firm’s intermediation function in theborrowing and lending of money.Answer: earnings spread24. One part of ROE is or net incomeover pre-tax net operating income which measures the financialfirm’s use of security gains and losses and other tax managementtools to minimize tax exposure.Answer: tax management efficiency25. Net profit margin can be split into two parts,and tax management efficiency. The first part is pre-tax netoperating income over total operating revenue which looks at howmany dollars of revenue survive after operating expenses areremoved.Answer: expense control efficiencyTrue/False QuestionsT F 26. Financial institutions that pursue the "quiet life" as a goal are really pursuing risk minimization.Answer: TrueT F 27. Attempting to maximize a bank's stock value is the key objective for banks which should have priority over all otherbank goals.Answer: TrueT F 28. If the expected stream of future bank shareholder dividends rises, a bank's stock price should also rise, other factorsheld constant.Answer: TrueT F 29. If the discount factor associated with the value of a bank's stock rises, the bank's stock price should rise, other factorsheld constant.Answer: FalseT F 30. A bank's ROA equals its ROE times the ratio of total assets divided by total equity capital.Answer: FalseT F 31. According to the textbook a bank's asset-utilization ratio reflects the mix and yield on the bank's portfolio of assets.Answer: TrueT F 32. The bank's profit margin or ratio of net after-tax income to total operating revenue is a measure of financialleverage for a bank.Answer: FalseT F 33. The ratio of a bank's net after-tax income to pre-tax net operating income is described in the text as a measure of taxmanagement efficiency.Answer: TrueT F 34. In the textbook the ratio of pre tax net operating income to total operating revenues is described as a measure ofthe effectiveness of a financial institution’s expense-controlefficiency.Answer: TrueT F 35. The ratio of non-performing assets to total loans and leases is a measure of credit risk in banking.Answer: TrueT F 36. The measure of a bank's efficiency and return known as the "earnings spread" subtracts total interest expenses from all the bank's interest income and these two items are then dividedby total assets.Answer: FalseT F 37. In recent years the U.S. banking industry's equity multiplier has generally risen in response to regulatory pressureto raise more capital.Answer: FalseT F 38. If a bank adds more full-time employees and posts the same net operating income, its employee productivity ratio, asdefined in the text, must fall.Answer: TrueT F 39. The most profitable U.S. banks in terms of both ROA and ROE are medium-size institutions in the asset size range of$100 million to $10 billion, according to the textbook. Answer: TrueT F 40. ROA measures how capably the management of a financial institution has been converting the institution's assetsinto net earnings.Answer: TrueT F 41. The noninterest margin is generally positive for most banks.Answer: FalseT F 42. The ratio of nonperforming assets to total loans and leases is considered to be a measure of a bank's market risk. Answer: FalseT F 43. Charge-offs represent securities a bank decides to sell because they have declined in value.Answer: FalseT F 44. Loans past due for 90 days or more are classified as nonperforming assets.Answer: TrueT F 45. The ratio of cash and government securities to total assets is considered to be a measure of liquidity risk in banking. Answer: TrueT F 46. The ratio of uninsured deposits to total deposits is considered to be a measure of credit risk in banking. Answer: FalseT F 47. The interest rate spread between market yields on bank debt issues (such as capital notes and CDs) and the market yields on government securities of the same maturity isconsidered to be a measure of market risk in banking. Answer: FalseT F 48. The ratio of a bank's net operating income to the number of a bank's full-time-equivalent employees is called theemployee productivity ratio.Answer: TrueT F 49. Smaller banks usually have fewer liquid assets than larger banks.Answer: FalseT F 50. The bank's asset utilization ratio reflects the effectiveness of the bank's expense management.Answer: FalseT F 51. The FDIC is a private credit rating company which provides credit ratings on the short term and long term securities issued by banks.Answer: FalseT F 52. During the 1980's the Comptroller of the Currency, the Federal Reserve and the FDIC created a new tool to helpthem analyze the financial condition of banks. This new tool is called the Uniform Bank Performance Report.Answer: TrueT F 53. Liquidity risk for a bank examines the quality of the bank's assets and, in particular, the quality of the bank's loans. Answer: FalseT F 54. The bank's degree of asset utilization (AU) or ratio of total operating revenue to total assets is a measure of assetmanagement efficiency, especially in terms of the mix and yield on assets.Answer: TrueT F 55. According the case study of the failure of Superior Bank of Chicago and the FDIC’s takeover of this institution in2001, the main problem was attributed to misleading accounting practices of inflating asset values and revenues deflatingliabilities and expenses. The Sarbanes-Oxley AccountingStandards Act of 2002 addresses this issue and expresslyencourages combining auditing and consulting relationships inorder to promote efficiency and profitability of financialinstitutions.Answer: FalseMultiple Choice Questions56. The ratio of a bank's interest income from its loans and securityinvestments less interest expenses on debt issued divided bytotal earning assets measures a bank's:A) Net operating marginB) Net return before special transactionsC) Net interest marginD) Return on assetsE) None of the aboveAnswer: C57. ROE for a bank is calculated by:A) Dividing net after-tax income by total equity capital.B) Dividing total operating revenue less operating expenses by totalassets.C) Deducting total interest expenses from total interest income anddividing by total equity capital.D) Noninterest income less noninterest expenses divided by totalearning assets.E) None of the above.Answer: A58. The difference between such sources of bank income as servicecharges on deposits and trust-service fees and such sources ofbank expenses as salaries and wages and overhead expensesdivided by total assets or total earning assets is called the:A) Net profit marginB) Net operating marginC) Net noninterest marginD) Net return on assetsE) None of the aboveAnswer: C59. A bank's ROE equals its ROA times its:A) Net profit marginB) Total assets divided by total equity capitalC) Total operating revenues divided by total assetsD) Ratio of net after-tax income to total operating revenuesE) None of the above.Answer: B60. The earnings spread for a bank is equal to:A) Total interest income divided by total earning assets less totalinterest-expense divided by total interest-bearing bank liabilities. B) Total interest income less total interest expenses divided byearning assets.C) Total operating revenues less total operating expenses divided bytotal assets.D) Total cash and noncash expenses subtracted from interest andnoninterest income divided by total assets.E) None of the above.Answer: A61. The so-called employee productivity ratio for a bank is equal to:A) Net operating revenue less total interest expenses per employee.B) Total interest and noninterest expense per employeeC) Net operating income per full-time-equivalent employeeD) Total operating earnings less salaries and wages expense peremployee.E) None of the above.Answer: C62. According to the textbook the most profitable banks in theUnited States in 2007 fell in the asset size range of:A) Under $25 million in total assetsB) Under $100 million in total assetsC) Between $100 million and $10 billion in total assetsD) Over $10 billion in total assetsE) None of the above.Answer: D63. A bank's stock price will tend to rise if the:A) Value of the stream of future stockholder dividends is expectedto increaseB) The banking organization's perceived level of risk has fallenC) Expected dividends increase, while perceived level of riskdeclinesD) All of the above.E) None of the above.Answer: D64. The ratio that equals total interest income divided by totalearning assets less total interest expense divided by totalinterest-bearing liabilities is known as the:A) Earnings baseB) Earnings spreadC) Net income marginD) Net return prior to special transactionsE) None of the aboveAnswer: B65. What do loans and security investments represent for a bank?A) Earning assetsB) Classified assetsC) Discretionary accountsD) Market-valued assetsE) None of the aboveAnswer: A66. The so-called tax-management efficiency ratio consists of:A) Total tax liabilities over net incomeB) Tax-exempt assets over taxable assetsC) Net income over pre-tax net operating incomeD) Taxes owed over total liabilities of a bankE) None of the above.Answer: C67. The ratio of net loans to total assets is considered to be ameasure of what form of risk in banking?A) Credit riskB) Liquidity riskC) Market riskD) Interest-rate riskE) None of the aboveAnswer: B68. OE for a bank reflects:A) How well the assets of the bank are managedB) The bank's use of leverageC) How well the bank controls expensesD) All of the aboveE) None of the aboveAnswer: D69. A ratio that can be used to measure a bank's credit risk wouldbe:A) Net loans/total assetsB) Interest sensitive assets/interest sensitive liabilitiesC) Total assets/number of full time employeesD) Nonperforming loans/total loansAnswer: D70. A bank that has a low profit margin most likely:A) Is doing a poor job of controlling expensesB) Has a small amount of financial leverageC) Has a small amount of liquidity riskD) Has assets that are not very productiveE) None of the aboveAnswer: A71. A bank that has a high asset utilization (AU) ratio most likely:A) Is doing a poor job of controlling expensesB) Has a small amount of financial leverageC) Has a small amount of liquidity riskD) Is allocating assets to the most productive investmentsE) None of the aboveAnswer: D72. Which of the following would be the best example of a ratioused to examine the cost of one of the bank's liabilities?A) Demand deposits/ total assetsB) Interest on time deposits/ total time depositsC) Interest on real estate loans/ total real estate loansD) Interest sensitive assets/ interest sensitive liabilities Answer: B73. Which of the following would be the best example of a ratioused to examine the return of one of the bank's assets?A) Demand deposits/ total assetsB) Interest on time deposits/ total time depositsC) Interest on real estate loans/ total real estate loansD) Interest sensitive assets/ interest sensitive liabilities Answer: C74. Which of the following would be the best example of a ratioused to examine the bank's interest rate risk?A) Demand deposits/ total assetsB) Interest on time deposits/ total time depositsC) Interest on real estate loans/ total real estate loansD) Interest sensitive assets/ interest sensitive liabilities Answer: D75. A bank expects to pay a dividend next year of $3.45 and alsoexpects dividends to grow at a rate of 7% from now on. If theappropriate discount rate is 15%, what should this bank's stock price be in the market?A) $23.00B) $43.13C) $46.14D) $49.29E) $24.61Answer: B76. Using the information listed below for Carter State Bank, whatis this bank's ROE?Net income$55 millionTotal operating revenue$650 millionTotal assets$4,055 millionTotal equity capital$350 millionA) 8.46 percentB) 16.03 percentC) 15.71 percentD) 1.36 percentE) None of the aboveAnswer: C77. Using the information listed below for Carter State Bank, whatis this bank's ROA?Net income$55 millionTotal operating revenue$650 millionTotal assets$4,055 millionTotal equity capital$350 millionA) 8.46 percentB) 16.03 percentC) 15.71 percentD) 1.36 percentE) None of the aboveAnswer: D78. Using the information listed below for Carter State Bank, whatis this bank's net profit margin?Net income$55 millionTotal operating revenue$650 millionTotal assets$4,055 millionTotal equity capital$350 millionA) 8.46 percentB) 16.03 percentC) 15.71 percentD) 1.36 percentE) None of the aboveAnswer: A79. Using the information listed below for Carter State Bank, whatis this bank's asset utilization ratio?Net income$55 millionTotal operating revenue$650 millionTotal assets$4,055 millionTotal equity Capital$350 millionA) 8.46 percentB) 16.03 percentC) 15.71 percentD) 1.36 percentE) None of the aboveAnswer: B80. The TRC Bank has a net profit margin of 7.5%, an assetutilization ratio of 18%, an equity multiplier of 20 times. What is this bank's ROA?A) 27.00 percentB) 1.35 percentC) 7.50 percentD) 1.50 percentE) 3.6 percentAnswer: B81. The TRC Bank has a net profit margin of 7.5%, an assetutilization ratio of 18%, an equity multiplier of 20 times. What is this bank's ROE?A) 27.00 percentB) 1.35 percentC) 7.50 percentD) 1.50 percentE) 3.6 percentAnswer: A82. The Smith-James Bank has an ROE of 17.5%, an assetutilization ratio of 13% and a net profit margin of 9%. What isthis bank's ROA?A) 14.96 percentB) 1.58 percentC) 1.17 percentD) 134.62 percentE) None of the aboveAnswer: C83. The Smith-James Bank has an ROE of 17.5%, an assetutilization ratio of 13% and a net profit margin of 9%. Whatmust this bank's equity multiplier be?A) 14.96 timesB) 1.58 timesC) 1.17 timesD) 134.62 timesE) None of the aboveAnswer: A84. What is the equity multiplier for a bank where equity is equal to10 percent of total assets?A) 90.0B) 10.0C) 1.1D) 110.0E) 1.0Answer:85. Which of the following ratios would be a measure of credit risk?A) Nonperforming Loans/Net LoansB) Net Loans/Total AssetsC) Interest Sensitive Assets/Interest Sensitive LiabilitiesD) Equity Capital/Total AssetsE) None of the aboveAnswer: A86. Which of the following ratios would be a measure of marketrisk?A) Nonperforming Loans/Net LoansB) Net Loans/Total AssetsC) Interest Sensitive Assets/Interest Sensitive LiabilitiesD) Equity Capital/Total AssetsE) None of the aboveAnswer: E87. In recent years banks have been __________ profitable than (as)S&Ls and Savings Banks.A) MoreB) LessC) AsD) Much moreE) Much lessAnswer: A88. Operational risk includes which of the following?A) Failure of bank’s computer systemB) Closure of a bank for three months due to flooding from a major hurricaneC) Embezzlement of funds of a bank by a teller of the bankD) Closure of a bank for two weeks due to a fire from a lightening strikeE) All of the above are example of operational risk Answer: E89. Brian Smith, CEO of Carter National Bank, decides thatinterest rates are going to fall in the future and as a result buys $100 million in 30 year Treasury Bonds for thebank’s security portfolio. Instead, interest rates risecausing the value of these bonds to fall. This would be an example of which of the following types of risk?A) Operational riskB) Legal riskC) Compliance riskD) Strategic riskE) Reputation riskAnswer: D90. Chaos State Bank has an old computer system which cango down for weeks at a time, leaving customers unable to access their accounts online. Many customers have leftthe bank for banks with more reliable computer systems.Which type of risk would this be an example of?A) Operational riskB) Legal riskC) Compliance riskD) Strategic riskE) Reputation riskAnswer: A91. Carson County State Bank has a ratio of equity capital tototal assets of 2.5%. The FDIC which regulates this bank has determined that this is not enough equity capital and is making the bank issue new stock in the market. Inaddition, they are not allowing the bank to issue adividend to their current stockholders. Which type of risk would this be an example of?A) Operational riskB) Legal riskC) Compliance riskD) Strategic riskE) Reputation riskAnswer: C92. Everett Bank has just learned that there is a disgruntledformer employee who has created a blog that is tellingeveryone that Everett Bank has halved their customerservice representatives and so customers have greatdifficulty getting through to a live person when there is a problem with their account. Everett is worried that they may lose customers as a result. Which type of risk would this be an example of?A) Operational riskB) Legal riskC) Compliance riskD) Strategic riskE) Reputation riskAnswer: E93. Norman Bank made a loan of $1,000,000 to JarodLeFevre. Jarod has declared bankruptcy and NormanBank has just learned that the judge in the case has ruled that Jarod does not have to pay any of the loan back orforfeit any of his assets. Which type of risk would this be an example of?A) Operational riskB) Legal riskC) Compliance riskD) Strategic riskE) Reputation riskAnswer: B94. Forrest Fennell is thinking about investing in Capital CityBank. He is examining certain ratios of the bankincluding the ratio of nonperforming loans to total loans and leases and the provision for loan losses to total loans and leases. What type of risk is Forrest attempting tomeasure with these ratios?A) Credit riskB) Liquidity riskC) Market riskD) Interest rate riskE) Operational riskAnswer: A95. Gerald Wilkens is thinking about investing in TallahasseeState Bank. He is examining certain ratios of the bankincluding the ratio of cash assets and governmentsecurities to total assets and purchased funds to totalassets. What type of risk is Gerald attempting to measure with these ratios?A) Credit riskB) Liquidity riskC) Market riskD) Interest rate riskE) Operational riskAnswer: B96. Amy Farmer is thinking about investing in the GuthrieNational Bank. She is examining certain ratios of thebank including the ratio of the book value of the assets to the market value of the assets and the market value of the bonds held by the bank to their recorded value. Whattype of risk is Amy attempting to measure with theseratios?A) Credit riskB) Liquidity riskC) Market riskD) Interest rate riskE) Operational riskAnswer: C97. Paul Smith is thinking about investing in Capital CityBank. He is examining certain ratios of the bankincluding the ratio of interest sensitive assets to interestsensitive liabilities and uninsured deposits to totaldeposits. What type of risk is Paul attempting to measurewith these ratios?A) Credit riskB) Liquidity riskC) Market riskD) Interest rate riskE) Operational riskAnswer: D98. The Garic State Bank of New Orleans was under waterfor three weeks after Hurricane Katrina hit the state. Thelobby is full of mud and other debris. Many of thevaluables stored in the bank’s safety deposit boxes havebeen ruined. John Garic, the President and CEO of thebank, has been working night and day to reopen the bank.What type of risk has John been dealing with?A) Credit riskB) Liquidity riskC) Market riskD) Interest rate riskE) Operational riskAnswer: E99. Castle State Bank has the following financialinformation.Balance Sheet Income StatementCash$100Interest Income$400 Securities Investments$600Interest Expenses($150) Net Loans$1200Non-Interest Income$50Net Premises and Equip.$300Non-Interest Expenses($100) Total Assets$2200Provision for LoanLosses($60)Deposits$1100 Pre Tax Net OperatingIncome$140Non-Deposit Borrowings *$800Securities Gains(Losses)($40)Equity Capital$300Taxes($45) Total Liabilities andEquity$2200Net Income$55 * All Purchased FundsUse this information to calculate Castle State Bank’s ROEA) 20.45%B) 18.33%C) 12.22%D) 7.33%E) 2.5%Answer: B100. Castle State Bank has the following financialinformation.Balance Sheet Income StatementCash$100Interest Income$400 Securities Investments$600Interest Expenses($150) Net Loans$1200Non-Interest Income$50 Net Premises and Equip.$300Non-Interest Expenses($100) Total Assets$2200Provision for LoanLosses($60) Deposits$1100 Pre Tax Net Operating $140IncomeNon-Deposit Borrowings *$800Securities Gains(Losses)($40)Equity Capital$300Taxes($45) Total Liabilities andEquity$2200Net Income$55* All Purchased FundsUse this information to calculate Castle State Bank’s ROAA) 20.45%B) 18.33%C) 12.22%D) 7.33%E) 2.5%Answer: E101. Castle State Bank has the following financialinformation.Balance Sheet Income StatementCash$100Interest Income$400 Securities Investments$600Interest Expenses($150) Net Loans$1200Non-Interest Income$50 Net Premises and Equip.$300Non-Interest Expenses($100) Total Assets$2200Provision for LoanLosses($60)Deposits$1100 Pre Tax Net OperatingIncome$140Non-Deposit Borrowings *$800Securities Gains(Losses)($40)Equity Capital$300Taxes($45)Total Liabilities andEquity$2200Net Income$55* All Purchased FundsUse this information to calculate Castle State Bank’s net profit marginA) 20.45%B) 18.33%C) 12.22%D) 7.33%E) 2.5%Answer: C102. Castle State Bank has the following financialinformation.Balance Sheet Income StatementCash$100Interest Income$400 Securities Investments$600Interest Expenses($150) Net Loans$1200Non-Interest Income$50 Net Premises and Equip.$300Non-Interest Expenses($100) Total Assets$2200Provision for LoanLosses($60)Deposits$1100 Pre Tax Net OperatingIncome$140Non-Deposit Borrowings *$800Securities Gains(Losses)($40)Equity Capital$300Taxes($45) Total Liabilities andEquity$2200Net Income$55 * All Purchased Funds。

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Chapter 5The Financial Statements of Banks and Their Principal CompetitorsFill in the Blank Questions1. Fed funds purchased is an example of _______________________ along with Eurodollarborrowings.Answer: nondeposit borrowings2. The short term securities of the bank, including T-Bills and commercial paper, are often called__________________________ because they are the second line of defense to meet demands for cash.Answer: secondary reserves3. __________________________ is a noncash expense on the bank's income statement whichallows the bank to account for future bad loans.Answer: Provision for loan losses4. __________________________ is the difference between interest income and interest expensesfor a financial institution.Answer: Net interest income5. __________________________ are the primary long term liabilities of the bank. These liabilitiesare paid only after deposits have been paid in the event of bankruptcy.Answer: Subordinated notes and debentures6. A(n)__________________________ is where the financial institution agrees to guaranteerepayment of a customer's loan received from a third party.Answer: standby credit agreement7. A(n)__________________________ is a short term collateralized loan. The collateral that is usedgenerally consists of T-Bills.Answer: repurchase agreement8. A(n)__________________________ is a deposit account which pays an interest rate competitivewith money market mutual funds and which generally has limited check writing ability.Answer: money market deposit account9. _____________________ is the sum of all outstanding IOU's owed to the bank in the form ofconsumer, real estate, commercial and agriculture loans as well as other types of credit extensions.Answer: gross loans10. A financial institution often records the value of its assets and liabilities at _______________which is the original or historical cost of the asset.Answer: book value11. The principal types of__________________________ include fee income, income from fiduciaryactivities and services charges on deposits.Answer: noninterest income12. The__________________________ shows the amount of revenues received and expenses incurredover a specific time period.Answer: Report of Income (income statement)13. The__________________________ lists the assets, liabilities and equity capital held by the bankon a given date.Answer: Report of Condition (balance sheet)14. ______________ is labeled "Accounting for Derivative Instruments and Hedging Activities."Answer: FASB 13315. ________________ labeled “Accounting for Derivative Instruments and Hedging Activities” andits recent amendments, FASB 138, are designed to make derivatives more publicly visible on corporate financial statements.Answer: FASB 13316. Under _____________ banks must account for the expected loss of interest income onnonperforming loans when calculating their loan-loss provision.Answer: FASB 11417. Temporarily buying and selling securities by a securities firm in a thinly traded market so as toinfluence the price is known as _________________.Answer: painting the tape18. The activity of manipulating the financial statements to artificially enhance the banks financialstrength is known as ___________________.Answer: window dressing or ‘creative accounting’19. is direct and indirect investment in real estate. These areproperties obtained for compensations for nonperforming loans.Answer: Other Real Estate Owned (OREO)20. consists of interest income received on loans from customers thathas not yet been earned by the bank under accrual accounting methods.Answer: Unearned discount income21. can be held by individuals and nonprofit institutions, bear interest andpermit drafts from being written against the account to pay third parties.Answer: Now accounts22.In the worldwide banking system, represent transferable time deposits ina variety of currencies and are often the principal source of short term borrows by banks.Answer: Eurocurrency Borrowings23.One part of arises from fees charged for ATM and POS transactions.Answer: Other Noninterest Income24.Fees that arise from a financial firm’s trust activities, fees for managing a corporations’ interest anddividend payments and fees for managing corporate or individual retirement plans are all included in the category of fees arising from .Answer: fiduciary activities25.Checking account maintenance fees and overdraft fees are included in the noninterest incomeaccount under .Answer: service charges on deposit accountsTrue/False QuestionsT F 26. On a bank's income statement (Report of Income) deposit costs are financial inputs.Answer: TrueT F 27. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.Answer: TrueT F 28. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition.Answer: TrueT F 29. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.Answer: TrueT F 30. Securities income is a financial output listed on a financial institution's Report of Condition.Answer: FalseT F 31. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.Answer: TrueT F 32. When a loan is classified as nonperforming any accrued interest recorded on the bank's books, but not actually received, must be deducted from a bank's loan revenues.Answer: TrueT F 33. In U.S. banking, securities gains are treated as ordinary income.Answer: TrueT F 34. Most banks report securities gains as a component of their total noninterest income.Answer: FalseT F 35. A bank displaying trading account securities on its balance sheet is serving as a security dealer and plans to sell those securities before they reach maturity.Answer: TrueT F 36. Bad loans normally do not affect a bank's current income.Answer: TrueT F 37. The expensing of a worthless loan usually must occur in the year that loan become worthless.Answer: TrueT F 38. Recoveries on loans previously charged off are added to the Provision for Loan Losses (PLL) account on a bank's income statement.Answer: FalseT F 39. Loan-loss reserves set aside to cover a particular loan or loans expected to be a problem or present the bank with above-average risk are known as specific reserves.Answer: TrueT F 40. U.S. banks (especially those with $500 million or more in total assets) are required to file financial statements audited by an independent public accountant with their principalfederal regulatory agency.Answer: TrueT F 41. Off-balance-sheet items for a bank are fee generating transactions which are not recorded on their balance sheet.Answer: TrueT F 42. The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to .6 percent of their eligible loans.Answer: FalseT F 43. After the Tax Reform Act of 1986, large banks (>$500 million in assets) were required to use the reserve method of accounting for future loan loss reserves.Answer: FalseT F 44. The number one source of revenue for a bank based on dollar volume is loan income.Answer: TrueT F 45. In looking at comparative balance sheets, it can be seen that large banks rely more heavily on nondeposit borrowings while small banks rely more heavily on deposits.Answer: TrueT F 46. The Pension Fund industry is now larger than the Mutual Fund industry.Answer: FalseT F 47. Off-balance-sheet items for banks have declined in recent years.Answer: FalseT F 48. Except for banks, Savings & Loans and Savings Banks hold the most deposits.Answer: TrueT F 49. "Painting the tape" refers to the practice whereby banks understate their nonperforming loans.Answer: FalseT F 50. Financial statements issued by banks and nonblank financial service firms are looking increasingly similar today.Answer: TrueMultiple Choice Questions51.Bank assets fall into each of the following categories except:A)Loans.B)Investment securities.C)Demand deposits.D)Noninterest cash and due from banks.E)Other assets.Answer: C52.Banks generate their largest portion of income from:A)Loans.B)Short-term investment.C)Demand deposits.D)Long-term investments.E)Certificates of deposit.Answer: A53.Loans typically fall into each of the following categories except:A)Real estate.B)Consumer.C)Commercial and Industrial (business).D)Agricultural.E)Municipal.Answer: E54.Which of the following adjustments are made to gross loans and leases to obtain net loans andleases?A)The loan and lease loss allowance is subtracted from gross loansB)Unearned income is subtracted from gross interest receivedC)Investment income is added to gross interest receivedD) A and B.E) A. and C.Answer: D55.An example of a contra-asset account is:A)The loan and lease loss allowance.B)Unearned income.C)Buildings and equipment.D)Revenue bonds.E)The provision for loan loss.Answer: A56.The noncash expense item on a bank's Report of Income designed to shelter a bank's currentearnings from taxes and to help prepare for bad loans is called:A) Short-term debt interestB) Noninterest expenseC) Provision for taxesD) Provision for possible loan lossesE) None of the above.Answer: D57.A financial institution's bad-debt reserve, as reported on its balance sheet, is called:A) Unearned income or discountB) Allowance for possible loan lossesC) Intangible assetsD) Customer liability on acceptancesE) None of the aboveAnswer: B58.When a bank serves as a security dealer for certain kinds of securities (mainly federal, state, andlocal government obligations) the value of these securities is usually recorded in what account on a bank's Report of Condition?A) Investment SecuritiesB) Taxable and Tax-Exempt SecuritiesC) Trading Account SecuritiesD) Secondary ReservesE) None of the aboveAnswer: C59.The difference between noninterest income and noninterest expenses on a bank's Report of Incomeis called:A) Net Profit MarginB) Net Interest IncomeC) Net Income After Provision for Possible Loan LossesD) Income or Loss Before Income TaxesE) Net Noninterest IncomeAnswer: E60.The account that is built up by annual noncash expense deductions and is subtracted from GrossLoans on the Report of Condition is:A) Unearned incomeB) Nonperforming loansC) Allocated loan risk deductionsD) Allowance for possible loan lossesE) None of the above.Answer: D61.Nonperforming loans are credits on which any scheduled loan repayments and interest paymentsare past due for more than:A) 30 daysB) 60 daysC) 90 daysD) 180 daysE) None of the above.Answer: C62.One-time only transactions that often involve financial assets or real property pledged as collateralbehind a loan and upon which the bank has foreclosed affect a bank's account known as:A) Allowance for loan lossesB) Nonrecurring sales of assetsC) Asset gains or lossesD) Provision for loan and security lossesE) None of the above.Answer: B63.The use of fixed assets, rather than financial assets, in order to increase earnings flowing to a bank'sstockholders is known as:A) Plant and equipment investmentB) Financial leverageC) Operating leverageD) Nondeposit capitalE) None of the above.Answer: C64.Banks depend heavily upon borrowed funds supplied by customers with little owners' capitalinvested. This means that banks make heavy use of:A) Financial leverageB) Capital restructuringC) Operating LeverageD) Margin borrowingE) None of the above.Answer: A65.When a loan is considered uncollectible, the bank's accounting department will write (charge) it offthe books by reducing the ______ and the accounts. Which choice below correctly fills in the blank in the preceding sentence?A) PLL and Gross LoansB) ALL and Net LoansC) ALL and Gross LoansD) PLL and Net LoansE) None of the above.Answer: C66.The common banking practice of selling those investment securities that have appreciated in orderto reap a capital gain and holding onto those securities whose prices have declined is known as:A) Gains tradingB) Performance bankingC) Loss control tradingD) Selective portfolio managementE) None of the above.Answer: A67.Noninterest revenue sources for a bank are called:A) Commitment fees on loansB) Fee incomeC) Supplemental incomeD) Noninterest marginE) None of the above.Answer: Brge U.S. banks must use which of the methods listed below to determine their provision for loanloss expense?A) Experience methodB) Reserve methodC) Specific charge-off methodD) Historical cost methodE) None of the above.Answer: C69.A bank's temporary lending of excess reserves to other banks is labeled on the balance sheet as:A) Fed Funds PurchasedB) Fed Funds SoldC) Money Market DepositsD) Securities Purchased for ResaleE) None of the aboveAnswer: B70.A bank sells shares of its common stock with a par value of $100 for $200 in the market. Whichtwo accounts on the bank's balance sheet are going to be affected?A) Retained earnings and capital surplus accountsB) Subordinated notes and debentures and commons stock outstanding accountsC) Retained earnings and common stock outstanding accountsD) Common stock outstanding and capital surplus accountsE) Only the common stock outstanding account is affectedAnswer: D71.A type of letter of credit which is widely used in international trade is known as:A) Banker's acceptanceB) Commercial paperC) Repurchase agreementD) Fed funds purchasedE) None of the aboveAnswer: A72.A bank which starts with ALL of $1.48 million at the beginning of the year, charges off worthlessloans of $.94 million during the year, recovers $.12 million on loans previously charged off and charges current income for a $1.02 million provision for loan losses will have an ALL at the end of the year of:A) $.66 millionB) $3.32 millionC) $1.68 millionD) $1.28 millionE) The same amount as at the beginning of the yearAnswer: C73.A bank that has total interest income of $67 million and total noninterest income of $14 million.This bank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net interest income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: D74.A bank that has total interest income of $67 million and total noninterest income of $14 million.This bank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net noninterest income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: B75.A bank that has total interest income of $67 million and total noninterest income of $14 million.This bank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: A76.Which of the following financial statements shows the revenues and expense of a bank over a setperiod of time?A) The statement of stockholders equityB) The funds-flow statementC) The report of financial conditionD) The report of incomeE) None of the aboveAnswer: D77.Which of the following accounts is sometimes called the bank's primary reserves?A) Cash and deposits due from bankB) Investment securitiesC) Trading account securitiesD) Fed funds soldE) None of the aboveAnswer: A78.Which of the following assets is the largest asset item on the bank's balance sheet?A) SecuritiesB) CashC) LoansD) Bank PremisesE) None of the aboveAnswer: C79.What financial service industry category is second to the banking industry in total assets held:A) Mutual fundsB) ThriftsC) Investment banksD) Insurance companiesE) Pension fundsAnswer: A80.FASB Rule 115 focuses primarily on bank:A) Deposit sourcesB) Investments in marketable securitiesC) Derivatives tradingD) Loan-loss reservesE) Federal fundsAnswer: B81.Which of the following most accurately describes the principal type(s) of bank noninterest income:A) Fees from fiduciary transactionsB) Fees from deposit transactionsC) Fees from securities transactionsD) Fees from additional noninterest incomeE) All of the aboveAnswer: E82.Fee income arising from fiduciary transactions include all of the following except:A) Checking account maintenance feesB) F ees for managing and protecting a customer’s p ropertyC) Fees for recordkeeping for corporate securityD) Fees for dispersing interest and dividend payments for a corporationE) Fees for managing corporate and individual retirement plansAnswer: A83.You know the following information about the Miller State Bank:Gross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Net Loans?A) $250B) $350C) $500D) $50E) $150Answer: A84.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Depreciation?A) $250B) $30C) $70D) $40E) $110Answer: B85.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Total Liabilities?A) $390B) $60C) $450D) $500E) $50Answer: C86.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Undivided Profits?A) $50B) $5C) $10D) $40E) $450Answer: D87.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Total Liabilities Plus Equity?A) $250B) $450C) $150D) $50E) $500Answer: E88.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Net Interest Income?A) $300B) $150C) ($50)D) $120E) $80Answer: A89.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this in formation, what is this firm’s Net Non Interest Income?A) $300B) $150C) ($50)D) $120E) $80Answer: C90.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Pretax Net Operating Income (or Net Income before Extraordinary Items)?A) $300B) $150C) ($50)D) $120E) $80Answer: B91.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Net Income?A) $300B) $150C) ($50)D) $120E) $80Answer: D92.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Increase in Undivided Profits?A) $300B) $150C) ($50)D) $120E) $80Answer: E93.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is thi s firm’s Total Revenues?A) $800B) $850C) $150D) $950Answer: D94.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Allowance for Loan Losses?A) $1300B) $1000C) $50D) $200E) $100Answer: E95.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Net Premises?A) $130B) $1000C) $50D) $200E) $100Answer: C96.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Non Deposit Borrowings?A) $1000B) $300C) $800D) $200E) $500Answer: B97.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Liabilities?A) $1000B) $300C) $800D) $200E) $500Answer: C98.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Equity?A) $1000B) $300C) $800D) $200E) $500Answer: D99.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Assets?A) $1000B) $300C) $800D) $200E) $500Answer: A100.You know the following information about the Taylor National BankProvision for Loan Losses ($100)Income Taxes ($140)Non Interest Income $500Dividends ($60)Securities Gains (Losses) ($50)Interest Income $1500Non Interest Expense $750Interest Expenses $750Given this information, what is this firm’s Net Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: E101.You know the following information about the Taylor National BankProvision for Loan Losses ($100)Income Taxes ($140)Non Interest Income $500Dividends ($60)Securities Gains (Losses) ($50)Interest Income $1500Non Interest Expense $750Interest Expenses $750Given this information, what is this firm’s Net Non Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: D102.You know the following information about the Taylor National BankProvision for Loan Losses ($100)Income Taxes ($140)Non Interest Income $500Dividends ($60)Securities Gains (Losses) ($50)Interest Income $1500Non Interest Expense $750Interest Expenses $750Given this information, what is this firm’s Net Operating Income or Net Income Before。

商业银行管理彼得S.罗斯英文原书第8版 英语试题库Chap005

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